Course 302: Building Your Mutual Fund Portfolio
Develop a Core
In this course
1 Introduction
2 Define Your Objectives and Priorities
3 Develop a Core
4 Limit How Much You Put Outside the Core
5 Don't Worry about an Optimal Number of Funds
6 Consider Your Tax Situation

For each goal you have identified, you should have a core group of three or four funds that are proven performers. The bulk of your assets - typically 70% to 80% - should be invested in these core funds.

What are core holdings? They're the engines of your portfolio, the investments that you can count on to deliver year in and year out. Funds that fall into Morningstar's large-blend or large-value categories tend to be the best core investments for meeting your long-term goals. For shorter-term goals, consider short- or intermediate-term high-quality bond funds. Simplify the investing process by focusing on a few funds that can deliver what you want, and build your investment in those funds rather than adding other funds.

When looking for core funds, simple rules prevail. The more boring, the better; the goal is steady gains, not excitement. Look for funds with low fees, long-tenured managers, easily understandable strategies, moderate risk, and consistent performance.

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