Asset Allocation 

Avoiding closet trackers

Chris Dillow

Chris Dillow
Avoiding closet trackers

One common mistake investors make is to over-diversify. They hold so many stocks and funds that they end up with what is in effect a tracker fund, except that they pay more in management fees and dealing charges than they would on such a fund – and spend more time on it too. This mistake is easy to make. To see why, let’s look at the maths of diversification.

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