Mutual Fund Holdings: Less One

By Sun on Jul 20, 2007 in Mutual fund, Investing
Post viewed 822 times, 1 so far today

I moved one step further in achieving a simple financial life early this week when I eliminated one fund from our mutual fund holdings, reducing the total number of funds we own to 10 (still quite a large number).

The fund got dumped was T. R. Price Emerging Europe & Mediterranean (TREMX), which I have been investing since November 2005. The main reason for me to unload TREMX is I want to concentrate on one international fund. Besides TREMX, I also have Dodge & Cox International Fund (DODFX), which is my core foreign investment and its size is much bigger than TREMX. The decision is to be a little more efficient in investing and managing our finance and has little to do the funds’ performances. Actually, if I make selection based on the fund’s return, then DODFX would be the one to be cut as TREMX delivered far more superior returns than DODFX did in the past five years:

though TREMX has underperformed DODFX so far this year.

I didn’t really sell TREMX, but rather exchanged it to another T. R. Price fund, PRNEX and, at the same time, increased the monthly purchase of PRNEX from $50 to $100. Why? I feel the oil price will continue to rise and big oil companies such as ExxonMobil and ConocoPhillips, which are among the top 10 holdings of PRNEX, will benefit from high oil price.

After the latest adjustment, my mutual fund portfolio currently consists of

Alpine Dynamic Dividend (ADVDX): 3.61%
Buffalo Small Cap (BUFSX): 12.25%
CGM Focus (CGMFX): 14.71%
Dodge & Cox International Stock (DODFX): 17.34%
Dodge & Cox Stock (DODGX): 14.38%
Oakmark Equity & Income I (OAKBX): 10.82%
Tocqueville Gold (TGLDX): 8.56%
Third Avenue Real Estate Value (TAREX): 3.21%
T. Rowe Price Small-Cap Value (PRSVX): 9.48%
T. Rowe Price New Era (PRNEX): 5.63%

With these funds, I pretty much own every sector I want to own, such as precious metal (TGLDX), real estate (TAREX), energy (PRNEX), large-cap (DODGX), small-cap (BUFSX, PRSVX), international fund (DODFX), and dividend generator (ADVDX). One sector that I may consider is health care. If I eventually invest in health care, then my choice will be an ETF instead of a mutual fund.

The asset allocation of this portfolio looks like this

Overall, 20% of total investments are in small-cap stocks, 22% in mid-cap, and 57% in large-cap.

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3 Comment(s)

Matt | Jul 20, 2007 | Reply

Good work on moving towards a more simple and low-expense portfolio structure. Many investors are overwelmed by the amount of funds available in 401k programs or through large fund companies and end up “collecting” mutual funds.
Super Saver | Jul 20, 2007 | Reply

Sun,

One of the investment advisors I interviewed had a mutual fund diversification strategy to maximize returns and minimize volatility.

While I don’t know his specific funds, it seems you are following the same type of strategy. You seem to have a good diversification of sectors, which is important to prevent overlap of companies across funds.

Finally, I know what you mean about simplifying. I plan to start working on reducing the nubmer of accounts. The paperwork from statements are starting to become overwhelming
Sun | Jul 23, 2007 | Reply

I am planing to hold my current 10 funds for the foreseeable future as they pretty much cover all the sector I want. My only doubt is CGMFX. Its ER is quite high and makes huge capital gain distribution at the end of the year. But the return is good. So I may hold it for a while.

Yes, there are lots of papers every month, but I generally don’t read them