Investor Alert

New York Markets Open in:

Chuck Jaffe

Chuck Jaffe Archives | Email alerts

May 31, 2009, 3:12 p.m. EDT

Portfolio builder: Collector's edition

Commentary: Meet an investing expert who owns 62 mutual funds

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Morningstar Inc. (MORN)
  • X
    Longleaf Partners Fund (LLPFX)
  • X
    Third Avenue Value Fund;Institutional (TAVFX)

or Cancel Already have a watchlist? Log In

By Chuck Jaffe, MarketWatch

1 2

There's Longleaf Partners /zigman2/quotes/202270593/realtime LLPFX -2.19% , Third Avenue Value /zigman2/quotes/207225650/realtime TAVFX -1.96% , CGM Focus , Baron Asset /zigman2/quotes/207637417/realtime BARAX -2.14% , Clipper /zigman2/quotes/200302983/realtime CFIMX -1.69% , Yacktman /zigman2/quotes/201124163/realtime YACKX -1.87% , Ariel /zigman2/quotes/202345531/realtime ARGFX -2.39% , Fairholme /zigman2/quotes/200889155/realtime FAIRX -3.19% , and Oakmark Select /zigman2/quotes/207233272/realtime OAKLX -2.94% .

There's also Templeton Growth /zigman2/quotes/200474627/realtime TEPLX -1.60% , the first fund Phillips ever owned, the shares a gift from his father, which he acknowledges keeping mostly for sentimental reasons.

About four years ago, Phillips consolidated the bulk of his holdings into Vanguard's fund supermarket platform. He sold some Fidelity funds at the time -- frustrated by frequent management changes -- but says he mostly would get rid of a fund only if the manager changed and he didn't like the new head honcho. Most funds in the collection part of the portfolio are owner-operator funds run by famous managers.

"I have tried to align these funds with what I do with Morningstar, taking part in the programs that Morningstar offers, and then buying funds that we give high ratings to our where we showcase the managers at our conference," Phillips said. "Warren Buffett says he buys businesses and his favorite holding period is forever. Well, I buy funds that I want to own forever too.

"If you go in with that 'forever' intention, it makes the hurdle that much higher and makes it much harder to add a fund to your portfolio," Phillips added. "You're not going to buy the manager of the week or from the fund firm that keeps changing strategies. You can stop after just a few funds, but those will be the funds that you are confident will do the job over your lifetime."

Choose with care

While Phillips' collection is eccentric, his plan is not. It starts with a strategy -- one that included eliminating debt before beginning an aggressive savings plan -- that is implemented through a diversified portfolio of stock index and muni-bond funds. Only with those things in place is there room for what, for Phillips, is "fun money."

For some investors, a basic stock-and-bond strategy could be as simple as one fund, Phillips said, either a target-date portfolio that ages with the investor or a highly diversified balanced fund like Vanguard Wellington or Wellesley.

Expanding the portfolio from the one fund -- but sticking with the overall investment strategy -- will lead to a number of funds you can be comfortable with -- and not 62 of them.

Said Phillips: "I have complexity in my portfolio, but it's by choice -- and because of my interests and my job -- and not because something crept in there by accident. If someone starts with a strategy and then finds funds to achieve it -- and can remember that they're investing for life and not for last year or right now -- they'll find the right number."

/zigman2/quotes/202270593/realtime
US : U.S.: Nasdaq
$ 19.18
-0.43 -2.19%
Volume: 0.00
Dec. 5, 2022
loading...
/zigman2/quotes/207225650/realtime
US : U.S.: Nasdaq
$ 58.54
-1.17 -1.96%
Volume: 0.00
Dec. 5, 2022
loading...
/zigman2/quotes/207637417/realtime
US : U.S.: Nasdaq
$ 89.50
-1.96 -2.14%
Volume: 0.00
Dec. 5, 2022
loading...
/zigman2/quotes/200302983/realtime
US : U.S.: Nasdaq
$ 108.62
-1.87 -1.69%
Volume: 0.00
Dec. 5, 2022
loading...
/zigman2/quotes/201124163/realtime
US : U.S.: Nasdaq
$ 23.10
-0.44 -1.87%
Volume: 0.00
Dec. 5, 2022
loading...
/zigman2/quotes/202345531/realtime
US : U.S.: Nasdaq
$ 64.56
-1.58 -2.39%
Volume: 0.00
Dec. 5, 2022
loading...
/zigman2/quotes/200889155/realtime
US : U.S.: Nasdaq
$ 23.37
-0.77 -3.19%
Volume: 0.00
Dec. 5, 2022
loading...
/zigman2/quotes/207233272/realtime
US : U.S.: Nasdaq
$ 51.92
-1.57 -2.94%
Volume: 0.00
Dec. 5, 2022
loading...
/zigman2/quotes/200474627/realtime
US : U.S.: Nasdaq
$ 22.07
-0.36 -1.60%
Volume: 0.00
Dec. 5, 2022
loading...

Chuck Jaffe is a senior MarketWatch columnist. His work appears in dozens of U.S. newspapers.

1 2
This Story has 0 Comments
Be the first to comment
More News In
Investing

Story Conversation

Commenting FAQs »

Partner Center

About Chuck Jaffe

RSS News feed

Chuck Jaffe is a senior columnist for MarketWatch. Through syndication in newspapers, his "Your Funds" column is the most widely read feature on mutual fund...

Chuck Jaffe is a senior columnist for MarketWatch. Through syndication in newspapers, his "Your Funds" column is the most widely read feature on mutual fund investing in America. He also writes a general-interest personal finance column and the Stupid Investment of the Week column. Chuck does two weekly podcasts for MarketWatch, and frequently makes guest appearances on television, and on radio shows across the country. He is the author of three personal-finance books. His latest, “Getting Started in Hiring Financial Advisors,” was published in the spring of 2010 by John Wiley & Sons.

More from Chuck Jaffe

Link to MarketWatch's Slice.