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How Many Fund Holdings Is Too Many?

Josh Charlson, CFA (josh.charlson@morningstar.com)

Here's a question that seems simple but, like many investment topics, can be tricky to answer: How many funds should you own in a given account in your investment portfolio? If you want to keep things simple, you can go with as few as one (think target-date funds), three, or five funds that cover the core asset classes. My group at Morningstar provides outsourced fiduciary services to retirement-plan clients.