 Diversify
with actively managed fundsNot being satisfied with just tracking the
market, which is all index funds can hope to do, owners
of actively managed funds try to beat
the market. This
hybrid portfolio gives you the chance to try your luck
with actively managed funds, but keeps 66% of your
portfolio indexed, keeping the research-proven odds in
your favor.
- Research suggests
small and international funds better
benefit from active management than
large-company funds
- Choose actively
managed funds that have beaten their
index for the last five years or more
- Choose active funds
using a quantitative model, not a
stock-picking guru
- Studies also suggest
that the higher the expense ratio, the
lower the odds of longer-term
market-beating performance: don't pay an
expense ratio higher than 1.7%
|
 |
fund
type
|
fund name,
ticker symbol
and why I like it |
target amount |
expense ratio |
large index |
Schwab 1000 Index Fund
SNXFX Tracks the Schwab 1000
Index, representing the largest 1000 publicly
traded U.S. companies, enlivening the solid
performance of the S&P 500 with the diversity
of the 500 next-largest companies: over the last
five years, has returned three times as much as
the S&P 500, suggesting this fund is a robust
vehicle for bear as well as bull markets
|
34% |
0.29% |
small index |
Schwab
Small-Cap Index Fund SWSSX Tracks the next-largest
1000 publicly traded U.S. companies, for a
broadly diversified sampling of smaller stocks
|
17% |
0.19% |
small actively managed |
Northern
Small-Cap Value NOSGX
A
value fund that seeks to identify and buy stock
in small U.S. companies trading below their true
worth in hope their prices will rise faster than
the overall market
|
8% |
1.36% |
small actively managed |
Janus Triton Fund JATTX
According
to Morningstar, this small-cap growth fund
"delivers the goods"—Triton is
also the largest moon of Neptune, so that
probably helps, too
|
8% |
0.96% |
international index |
Schwab International Index
Fund SWISX Tracks the Morgan Stanley Capital International Europe, Australasia Far East
(MSCI-EAFE) Index, a benchmark index for 22 developed markets outside the United States and Canada, the largest components being Japan and the United
Kingdom: since its inception in 1969, this index has returned on average 9.45% a
year
|
17% |
0.19% |
international actively managed |
Oakmark International
Small Cap I OAKEX Despite occasional rough
times, this compact portfolio run by 2006
Morningstar International Stock Manager of the
Year David Herro has had good long-term results:
a 17% annualized return over the past decade,
bettering all but one of its category rivals
|
8% |
1.67% |
international actively managed |
Harding Loevner Emerging
Markets Portfolio HLEMX Many believe the greatest
growth over the coming decades will come from
emerging markets like India, China, and Brazil:
the renowned Harding Loevner investment team
examines selects from among over 20 developing
countries 35-75 companies having sound
management, financial strength, fast growth, and
an undervalued price
|
8% |
1.63% |
|