Are your holdings in your Value and Growth funds the same?
September 23, 07 by StealthyI was reading an investment blog and found this article that mentions that you should check your mutual fund holdings and compare them to make sure they are diversified from one another. The writer uses two funds as an example with one being Amerifunds Washington Mutual A (AWSHX) and the other being American Century Select Inv (TWCIX). One is classified as a value fund while the other is classified as a growth fund. They both had JP Morgan in their top three holdings, which would mean that if JP Morgan had a bad quarter and the stock went down then both funds would lose value under their holdings in the company. Opposite would happen if the JP’s price went up as you can imagine. I think it would be a good idea to know what companies your mutual funds are investing in because it is your money that is being that stock indirectly in a way.
I just compared my growth and value funds and found that none of the top 10 holdings are the same. If you want to check yours just go to yahoo finance and enter the fund symbol and then scroll down to holdings in the left navigation bar. Check out investing blog when you need something to read.
dong Says: 27.09.07 at 7:43 pm
Great point. Morningstar actually has great feature which will break down the holding in the mutual fund to tell you what you individual stock allocation is. Alas you have to pay for that service…
matt Says: 29.09.07 at 11:06 am
I think it would be a better idea not to invest in any actively managed mutual funds.
stealthy Says: 29.09.07 at 2:13 pm
I don’t have very many choices through my 401k at work. I have to go through fidelity to get my 75% match. I don’t do mutual funds out side of my 401k.
SavingDiva Says: 01.10.07 at 1:28 pm
I have a small mutual fund that my parents put a little bit of money in when I graduated from high school. It hasn’t done very well, but I never trusted myself to touch it. I’m thinking about looking for a better place to put it.
stealthy Says: 01.10.07 at 8:44 pm
Mind if I ask what fond you have it in Saving Diva?
GoldnSilver Says: 04.10.07 at 8:11 pm
when I was picking my funds, I ran a spreadsheet to see if there’s overlap of the top ten holdings among the funds that I was interested in. ( I got really confused, flipping back and forth among the funds, so I just put everything on a spreadsheet, side by side.)
One of the criterias when I was figuring out my allocation was to make sure I don’t have any overlaps. But… the catch is that the funds top holdings do change over time…
stealthy Says: 04.10.07 at 11:45 pm
Yea, that is a big catch that you have to watch. Maybe checking them on a yearly basis and rebalancing your portfolio if you see fit.