Unlimited Future Portfolio

Roxanne Fleszar's Unlimited Future Portfolio is for a single person in his or her late 20s. This person is contributing to a 401(k) retirement plan, plans to buy a home within five years and anticipates marrying and raising a family at some point, so he or she is saving with kids and retirement in mind.

For a young person with such a long time horizon, Fleszar says she'll put virtually all the portfolio's $100,000 into equities. "You'll make more money in equities than cash and bonds" over the long term, she says.

Even so, she says she would still spend a "great deal of time talking to [the client] about risk and market volatility so that he can live through the ups and downs of the market." She tries to ensure that if clients' portfolios fall even as much as 20%, they'd be able to live with it. As a result, she says, "Virtually none of my clients panicked during three major downturns."

Roxanne E. Fleszar Financial Resources Management Peabody, Mass. Fleszar has been in the financial-services industry since 1979 and frequently speaks and writes on investment topics. Her firm, Financial Resources, has been providing investment advice since 1982. She received her Certified Financial Planner designation from the College for Financial Planning.

For this portfolio, Fleszar began by setting aside 5% in a money-market account for a "personal reserve." She uses the GE Interest Plus Account (800-433-4480), but any money-market account will do. The important thing is to keep that much liquid, she says.

She allocated the remaining $95,000 among aggressive funds. Because of his age, the prospective client has much more time for volatility. Fleszar picked funds she works with all the time and uses with her own clients. She believes in style neutrality, so the portfolio is evenly weighted between growth and value funds.

Core Holdings

The next 60% of the portfolio was split between two funds, an old-timer and a newbie.

The veteran fund, (JAVLX Quote)Janus Twenty, got 30%. Manager Scott Schoelzel has been on the fund only since 1997, but it's one of the top-performing equity funds this year, up 51.8% through Nov. 25, according to Lipper Analytical Services. The fund itself has been around since 1985 and has returned an average of 19.6% each year since inception and a breathtaking 53% annually for the past three years.

Unlimited Future Portfolio Profile: Single 28-year-old, employed and contributing 6% of salary to 401(k), plans home purchase within five years but also saving for marriage/kids/retirement. Planner: Roxanne Fleszar, Financial Resources Management Corp., Peabody, Mass. Fund Objective Allocation YTD Return 3-year return* UAM Clipper Focused (VIGRX Quote) Value 30% 22.4% N/A (JAVLX Quote)Janus Twenty Capital appreciation 30% 51.8% 53% (BARAX Quote)Baron Asset Small-cap growth 10% -5% 17.7% (SKSEX Quote)Skyline Special Equities Small-cap value 10% -9.7% 18.4% (GAMNX Quote)GAM International International 15% 1.4% 13.3% GE Interest Plus Account Money market 5% N/A N/A

Source: Lipper Analytical Services. Data through Nov. 25. *Annualized.

Because of the strong track record of the (CFIMX Quote)Clipper Fund -- it's up 22.4% year to date -- Fleszar entrusts a 30% allocation into manager Jim Gipson's newest venture. As we reported when it was launched in September, the UAM Clipper Focused fund will be a more-fully invested version of the Clipper fund, which is well known for its large cash holdings.

Because both funds are focused on relatively small portfolios of stocks, roughly 30 each, they are fairly risky. She believes that will result in greater returns. "Both funds are managed by outstanding managers, and between the two funds, [the client] will have representation of the 60 best large-cap stocks out there."

Small Cap and International

The remaining 35% of the portfolio is divided among Fleszar's favorite managers and split evenly between value and growth. Ron Baron's (BARAX Quote)Baron Asset fund gets 10%. The growth fund has "over 100 names in it, and Ron is phenomenal," she says, despite his funds' lackluster performance this year. Baron Asset is down 5% for the year while its small-cap peers have sunk an average of 6.9%.

Fleszar put another 10% in the (SKSEX Quote)Skyline Special Equities fund. The value fund is down 9.7% for the year, but she has been placing clients into this fund for years and really believes in manager Bill Dutton. The $500 million fund is closed to new investors, but Fleszar and other advisers who have long-term relationships with the fund can get their clients into it.

For investors who can't get into this fund, one alternative is (SPEQX Quote)Skyline Small Cap Value Plus. The fund is managed by Kenneth Kailin and has a similar investment style, though it invests in mid-caps as well as small-caps. It is down 7.1% for the year.

With the remaining 15%, Fleszar "bought John Horseman." He has managed (GAMNX Quote)GAM International since 1990, and the fund has been top-ranked for the past 10 years. The majority of its holdings are in the U.K., Germany and Switzerland. It has returned an average of 13.3% annually for the past three years. But this year, its 1.4% return is trailing the average 9.4% return for international funds.

Keep Saving

On top of the money in this portfolio, Fleszar believes this young investor should save another $15,000 a year to generate enough money for a down payment on his future home without having to touch his $100,000 nest egg. She recommends he save $1,250 per month, with $1,000 going into the money-market account and the balance being spread among the funds in this portfolio.

If he balks at putting aside $1,250 per month, she would recommend keeping $15,000 liquid and investing only $85,000 in the portfolio so the down payment will be available, if necessary, in a flash.