How much is too much in one mutual fund/ETF?

[disneysteve]

What percentage were you comfortable with when you first invested with this fund? Do you think your reasoning was sound? Has anything about your investment strategy or style changed since then?

I had far less money when I first invested in the fund. I don't recall what % it was back then. Also, this is historically one of the best performing funds around, so over time, it has grown very nicely. It has averaged nearly 17%/year since inception in 1984.

I need to sit down and take a good look at the big picture and the current allocation of our portfolio and see where things stand. I haven''t done that recently but with the ongoing bull market, I'm sure things have gotten a little out of whack.

[TexasHusker]

I had far less money when I first invested in the fund. I don't recall what % it was back then. Also, this is historically one of the best performing funds around, so over time, it has grown very nicely. It has averaged nearly 17%/year since inception in 1984.

I need to sit down and take a good look at the big picture and the current allocation of our portfolio and see where things stand. I haven''t done that recently but with the ongoing bull market, I'm sure things have gotten a little out of whack.

Good idea. The stronger the bull, the bigger the coming bear. Bear markets can forever cancel the retirement dreams of those who are close when it occurs.

In a bull market, there's seemingly nothing that keeps the markets from rising.

In a bear market, there's seemingly nothing that keeps them from falling.

[Gailete]

As long as what fund you are invested in is diversified and is bringing in what you want/need I to I can't think of any reason that it would be a bad thing to stick with a fund. I read a lot and while I have read about some folks being invested in too many funds as well as stocks, I've never seen advice to have more of them when they are getting a good a good return.

But then I have seen some advice that I think is downright weird. Such as when you are about to retire at 65 or so, they tell you to pull out of stocks and go into bonds. With so many living another 20-30+ YEARS following retirement, why not keep your money in the stocks that are making you money? At least for another 15-20 years, for when you really are getting old and don't want to be dealing with the finances anymore.

I also don't understand the evening up of your portfolio on a yearly basis. Selling your stocks that is doing the best to buy more of something that isn't doing so well. Makes no mathematical sense to me.

I have started way to late to save for retirement. Well actually didn't start too late, but personal problems caused the money to have to be spent ore than once and completely wiped out. So my retirement money has been limping along and the last thing I want to do is sell one of best stocks that has more than doubled to buy something else and hope it will eventually double itself and provide dividends as well. I have been happy to see the numbers this year though. Everything I do buy pays dividends so I have more shares each year. I've never managed to see a portfolio grow like this due to the power of the internet and no need to cash it in, as in no matter how broke we are, I won't cash it in! It is fun to see things grow!

[corn18]

Asset allocation is all about risk management. These articles in the boglehead wiki explain it way better than I can:

https://www.bogleheads.org/wiki/Asset_allocation

https://www.bogleheads.org/wiki/Rebalancing

https://www.bogleheads.org/wiki/Risk_and_return:_an_introduction

[Nutria]

But what if it is a narrowly-focused fund? VGHAX only holds 75 stocks and the top ten make up over 40% of assets.

Right, so how much is too much? 10%? More? Less?

https://personal.vanguard.com/us/FundsQuarterEndHoldings?FundId=0552&FundIntExt=INT&MonthEnd=false

If your portfolio was 100% in VGHAX, then -- as of 07/31 -- you'd be slightly over-exposed to Bristol-Myers Squibb Co., Allergan plc and UnitedHealth Group.

If VGHAX is only 20%, then you're far under 5% on all your stocks.