In the latest Morningstar weekly overview there is a discussion...

  1. 285 Posts.
    In the latest Morningstar weekly overview there is a discussion on diversity in a share portfolio. The dogma is that diversity reduces risk but is this true? Diversity can also reduce returns. How diverse is diverse? When does diverse become worse? Factors that I thought were important are the ability/willingness to follow company, sector, national and global trends, whether the fund is in pension mode or accumulation mode, ones appetite for risk and other assets within and outside the fund.
    In my smsf, I have 16 stocks in a portfolio of about $500,000. Most of this is in larger companies with a few mid cap stocks a small exposure to two small companies. I find it hard to monitor more than about 15 stocks closely.
    Does investment in ETFs or other funds moderate the risk?
    Is it OK to buy blue chip stocks and sit on them? I held stock in a blue chip company in the 80's that steadily lost value and eventually disappeared!
    Is it time to increase investments in more mid cap stocks? If so, how to select them. By the time we mug punters get to hear the news, the market has already moved.
    Is it time to move more out of banks? I already sold down banks late last year but still hold some ANZ and WBC.

    Cheers

    Stephen
 
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