The Big Screen: Building a Better Portfolio

Everybody tells us we need a diversified portfolio, but nobody tells us what one looks like. So let's check one out.

The main idea with building a portfolio isn't to focus on what's working today, but rather to build a sensible blend of solid funds with varied styles. This gives you access to whatever style is working at any given time, smoothing your portfolio's performance as the winds inevitably shift on Wall Street. Of course, that's easier said than done, but if you're feeling the urge to broaden your portfolio, here's a quick and easy Baedeker for you.

A Fund Investor's Baedeker
U.S. Diversified Stock Funds
Large-Cap Growth	35%
Large-Cap Value	35%
Mid-Cap Growth	10%
Mid-Cap Value	10%
Small-Cap Growth	5%
Small-Cap Value	5%
Other Stock/Bond Funds
Sector Funds
Balanced Funds
Foreign Funds
Bond Funds

Over the past year, we've shown you a Perfect Portfolio and a Low-Maintenance Portfolio, to demonstrate two different ways to build a balanced portfolio. But this time, we've cobbled together a compilation of our Big Screens because most investors are looking for just one or two funds focusing on areas they've avoided.

Each week the Big Screen sifts different fund categories, looking for solid choices. In the chart to the right, you'll find a guide to the most recent fund screens covering different fund flavors. We've included the percentage of the Wilshire 5000 Total Stock Market Index that each U.S. stock fund category comprises. How much of your portfolio should be in each category is up to you, but you can use this chart as a benchmark.