Diversify Your Mutual Fund Portfolio: Morningstar Mutual Fund Investing Workbook, Level 2

by Christine Benz

The Morningstar Investment Coach: Building a Diversified Portfolio allows readers to take the next step in their mutual fund journey. With discussions of topics such as gauging risk and return together, how to choose index and international funds, and the importance of knowing your mutual fund manager, this practical guide will help readers sharpen their mutual fund investing skills.

Genres: Finance

256 pages, Paperback

First published December 29, 2004

Reviews

[Chad · Rating 2 out of 5]

I thought the 1st book in this series, Find the Right Mutual Fund: Morningstar Mutual Fund Investing Workbook Level 1, was OK, but I wanted more advanced information. So, I read this book, the 2nd in the series. It gave good general advice, but I would have liked to see some sample portfolios with actual numbers, based on age and risk tolerance.

Topics covered include risk and return, diversification, index funds, international funds, and bond funds.

Notes
Check funds' average market capitalization, since it can tell you more than the style box.

Put 70 - 80% of assets in core funds. Criteria to watch for:
- large blend
- large value
- low fees
- long tenured manager
- moderate risk
- consistent performance
Put the remaining 20 - 30% in specialty funds that focus on a certain sector or market.

Use tax-managed funds and funds with strong after-tax results.

To choose international funds, evaluate:
1. Which countries the fund invests in (developed vs emerging, Europe vs Asia vs Pacific, etc.)
2. Style: small, large, growth, value, etc.

To choose bond funds, look for:
- low-cost
- intermediate-term
- broad-based
- high quality (AAA or AA)
- government or corporate bonds

For municipal bonds, if you live in a high-tax state, buy single-state funds. Otherwise, buy national funds. In all cases, buy low-cost funds.