Course 501: Avoiding Portfolio Overlap
Do You Own Too Many Large-Cap Funds?
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?

Large-cap offerings make great core holdings, but it's easy to overdose on them. After all, they often get a lot of media coverage, they're easy to buy, and they're pretty simple to understand. It's vital that investors avoid large-cap addiction—especially large-cap offerings from the same fund family. Here's why: The large-cap universe is relatively small. Less than 9% of all stocks can be classified as "large cap." Generally, a fund shop's managers will draw upon a single research pool, so there's a good chance of overlap if you buy multiple large-cap funds from a single family. Incidentally, the odds of duplication increase if you stick to large-blend funds, the universe of the S&P 500. In fact, there is little justification for owning more than one large-blend fund. So once you have picked up a large-value and a large-growth fund—or a single large-blend fund—start looking at options elsewhere in the style box.

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