However, only two-thirds of Americans can describe the mutual funds, bonds, exchange-traded funds (ETFs) or other financial products they hold in their portfolios — down from 76% five years ago, according to a new analysis from investment and retirement site Hearts & Wallets. The good news is investors are more aware of their asset allocation, with 75% being able to identify their mix of assets last year — up from 68% in 2013.
Experts say the numbers are not all that surprising — and explainable.
“I think a similar comparison is knowing how many square feet your house is, but not knowing how many 2x4's it took to construct,” said Daniel Zajac, a partner at Simone Zajac Wealth Management Group in Philadelphia. “Asset allocation is the most important part. If you know anything about your portfolio, know this.”
Layton Cox, an investment strategist at Pathways Financial Partners in Tucson, Ariz., said one reason people may know their asset allocation is because it is easier to understand than underlying funds.
“It's easier to say, ‘I'm invested into international bonds,’ than it is to say, ‘I invest in a Dimensional Fund Advisor's open ended mutual fund that focuses on investment grade global bonds that have a maturity less than 5 years,’” Cox said.