Course 106: Core vs. Noncore Investments
How Big Your Core Should Be
In this course
1 Introduction
2 What Makes a Core Mutual Fund?
3 What about Core Stocks?
4 How Big Your Core Should Be

Clearly, a fund that is a core holding for one investor may not be a core holding for another investor. However, Morningstar analysts do discuss what role a fund may play in a portfolio--core, supporting, or specialty--in the Analysis section of a Morningstar Fund Report. (Note that Morningstar Analyses are available only to Premium Members. Nonmembers can take a free trial of's Premium Service.)

Core holdings take up 100% of some portfolios. In others, these investments account for 70% to 80% of assets. There's no rule for how large your core ought to be. But we suggest that core holdings take up at least two thirds of your portfolio. After all, you are relying on these solid, long-term investments to help you reach your goals.

Use noncore investments for diversification and growth potential. For instance, if your core is made up exclusively of large-cap stocks, you might want to add small-cap or international stocks to the noncore portion of your portfolio for diversification.

As long as you limit the more risky portion of your portfolio, you aren't likely to threaten the bulk of your nest egg--and your investing will be more adventurous.

Just don't forget to put together a reliable core first. You don't want more thrills than your portfolio can stand.

Next: The Quiz >>

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