Course 501:
Avoiding Portfolio Overlap
In this course
1 Introduction
2 Do You Favor One Investment Style over Another?
3 Do You Have Too Much in Any One Stock?
4 Do You Favor One or Two Sectors over Others?
5 Do You Own Too Many Large-Cap Funds?
6 Do You Own Multiple Funds Run by the Same Manager?
7 Do You Own Multiple Funds from One Boutique Family?

Success! You have determined your investment goals, figured out what you'll need to earn to reach them, and found investments that match those goals and your risk tolerance. Your portfolio is built, and you're ready to relax.

Not so fast.

Face it: Investing is a lifetime activity and you'll need to continue to monitor what you have created. Just as a parent never stops parenting, an investor never stops investing. So even after making all these decisions, you now face a more difficult—yes, more difficult—part of the process: monitoring your portfolio and learning how and when to make changes.

One of the very first problems you may face is the problem of portfolio overlap: You may have one or two individual stocks (such as behemoths General Electric GE or Microsoft MSFT), investment styles, or sectors overrepresented in your portfolio. After investing for a while, investors often find that though their funds come in different wrappers, many have similar content. In other words, these investors have too much of one thing. To gauge how much overlap your portfolio has, you can do some hefty calculations by hand, using shareholder reports. Alternately, you can enter your portfolio in a tracking tool such as Morningstar.com's Portfolio Manager.

To gauge your portfolio overlap, answer the following questions about your portfolio.

Next: Do You Favor One Investment Style over Another? >>


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