10

Suppose I wanted to follow the advice on this blog post:

An ideal bal­anced port­fo­lio would be a sin­gle fund. This forces you to look at your invest­ments as one big bucket, elim­i­nat­ing men­tal account­ing. It ensures you rebal­ance con­tin­u­ously, some­thing it’s tough to do oth­er­wise. More funds might be OK if you have a finan­cial plan­ner who auto­mat­i­cally rebal­ances for you.

How would I find such a fund that matches my needs? I'm in Israel, so I want to have a major portion of my investment tied to NIS (Israeli shekel currency.)

  • 4
    Israel is a smaller market than the US. You may not be able to find the investment product you seek in that sort of packaging. – user296 Apr 5 '11 at 0:21
  • If you only buy in an ideal single fund, Then that ideal single fund will be your single point of failure. – Pacerier Nov 17 '13 at 22:12
5

In the past 10 years there have been mutual funds that would act as a single bucket of stocks and bonds. A good example is Fidelity's Four In One. The trade off was a management fee for the fund in exchange for having to manage the portfolio itself and pay separate commissions and fees.

These days though it is very simple and pretty cheap to put together a basket of 5-6 ETFs that would represent a balanced portfolio. Whats even more interesting is that large online brokerage houses are starting to offer commission free trading of a number of ETFs, as long as they are not day traded and are held for a period similar to NTF mutual funds.

I think you could easily put together a basket of 5-6 ETFs to trade on Fidelity or TD Ameritrade commission free, and one that would represent a nice diversified portfolio. The main advantage is that you are not giving money to the fund manager but rather paying the minimal cost of investing in an index ETF. Overall this can save you an extra .5-1% annually on your portfolio, just in fees.

Here are links to commission free ETF trading on Fidelity and TD Ameritrade.

4

Not sure what your needs are or what NIS is: However here in the US a good choice for a single fund are "Life Cycle Funds". Here is a description from MS Money:

http://www.msmoney.com/mm/investing/articles/life_cyclefunds.htm

  • 1
    NIS are New Israeli Shekels – ripper234 Apr 5 '11 at 6:41
  • Thanks for the clarification - My options would probably not be available. – Ralph Winters Apr 5 '11 at 14:08
2

First, decide on your asset allocation; are you looking for a fund with 60% stocks/risky-stuff, or 40% or 20%?

Second, look for funds that have a mix of stocks and bonds. Good keywords would be: "target retirement," "lifecycle," "balanced," "conservative/moderate allocation." As you discover these funds, probably the fund website (but at least Morningstar.com) will tell you the percentage in stocks and risk assets, vs. in conservative bonds. Look for funds that have the percentage you decided on, or as close to it as possible.

Third, build a list of funds that meet your allocation goal, and compare the details. Are they based on index funds, or are they actively managed? What is the expense ratio? Is the fund from a reputable company? You could certainly ask more questions here if you have several candidates and aren't sure how to choose.

For investing in US dollars one can't-go-wrong choice is Vanguard and they have several suitable funds, but unfortunately if you spend in NIS then you should probably invest in that currency, and I don't know anything about funds in Israel.

Update: two other options here. One is a financial advisor who agrees to do rebalancing for you. If you get a cheap one, it could be worth it. Two is that some 401k plans have an automatic rebalancing feature, where you have multiple funds but you can set it up so their computer auto-rebalances you. That's almost as good as having a single fund, though it does still encourage some "mental accounting" so you'd have to try to only look at the total balance, not the individual fund balances, over time. Anyway both of these could be alternatives ways to go on autopilot, besides a single fund.

1

While it is certainly easy to manage single fund, I am not sure it's the right strategy. It's been proven again and again that portfolio diversification is key to long term gains in wealth. I think your best option is to invest in low cost index funds and ETFs. While rebalancing your portfolio is hard, it is vastly simpler if your portfolio only has ETFs.

  • 5
    I think the idea is that the single fund the OP is seeking would itself practice diversification internally. Such as a balanced fund of funds. – Chris W. Rea Apr 4 '11 at 14:50
0

Though a fan of ETFs (esp. high volume commission-free ones) recently a single, new fund VQT appeared on my radar of interest. It's based on dynamic hedging that has sort of build-in diversification and adapts to the market climate, pulling in and out varying amounts from cash, the S&P 500 and volatility futures based on VIX.

I've been Long VQT and it's followed the S&P500 during good times, though not at far, but crucially disconnected with much milder losses when the general market was nose diving. You can lookup and compare to SPY at http://finance.google.com

Not trying to give investment advice, in case that upsets some rules.

0

A single fund that reflects the local currency would be an index fund in the country. Look for mutual funds which provide for investing on the local stock index. The fund managers would handle all the portfolio balancing for you.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.