The latest stats show that about 45% of American households own a mutual fund or an Exchange-Traded Fund (ETF) as part of their retirement accounts.
I can make a pretty safe bet that 95% of those households have no idea what their 5 biggest stocks are that they hold inside those investments. But it is something that you should be looking at periodically, especially if you don’t have an adviser monitoring that stuff for you.
The good news is that there are several websites that allow you to take an “x-ray” of your portfolio so you can see the actual companies that you are invested in. More importantly, you can also see which of your mutual funds and ETFs that own the same stocks/bonds.
The reason that this is so important is so you know if you are properly diversified.
Here’s a great example of 2 ETFs that show a huge amount of overlap in their investments. That is, they each own many of the same stocks and so you would not be as diversified as you might have thought if you owned both of these.
I used the ETF Research Center’s Overlap Analysis Tool to illustrate this x-ray. As you can see, if you owned these ETFs, you would not be as diversified as you might have thought, since SPLG holds many of the same stocks as VYM.
For mutual funds, www.morningstar.com does a nice job of x-raying your portfolio. Also, you most likely will have tools similar to these on the site where your account is held.
Whatever tools you use, I suggest definitely taking a peek at your holdings about twice a year, just to make sure you don’t get too heavily concentrated in any one sector or stock.
Let me know if you need any assistance in taking an x-ray of your portfolio.
Joe Baker, CFP®
Baker Asset Management, LLC
joebaker@bakerassetmanagement.com
