Q&A: Do I have too many funds?

Question: I have about $31,000 in seven different Fidelity funds: Canadian Growth Company, True North, Canadian Asset Allocation, European Growth, RSP International Portfolio, Overseas, and Focus Health Care. I have a Group RRSP at my job and I have 10 years before retirement. Is that too many funds outside my group plan? Thank you. – J.P.

Gordon Pape’s Answer: Seven funds is not in itself an excessive number. What counts is which funds you are holding and how they fit with your group RRSP, which you haven’t given us any information about.

All the funds you mention invest in exclusively equities except Canadian Asset Allocation which holds a mix of bonds and stocks. Unless you are compensating for this with a strong fixed-income component in your group RRSP, you’re too heavily overweighted towards stocks with only 10 years left to retirement. Check out the overall asset mix.

The Fidelity funds you own are generally fine. However, ask yourself why you have positions in European Growth, International Portfolio, and Overseas.

European Growth gives you a focus on that continent. Overseas Fund is in the international equity category, ich means it does not invest in North America. Right now, it is heavily concentrated in Europe, so you have two funds that provide the same regional emphasis. International Portfolio Fund is a global fund, which also gives you Europe along with the rest of the world. Sounds like a lot of Europe to me.

Now consider the fact that you have no U.S. equity fund in this mix. Your only U.S. exposure is in International Portfolio Fund. At this point in time, I’d rather have a lot more of my money in the U.S. than in Europe.

Talk to your financial advisor about this. Ask his/her opinion about moving out of the European Growth Fund and the Overseas Fund. Get your overseas exposure through International Portfolio and then consider adding Fidelity Growth America or Small Cap America to the list to bulk up the U.S. presence. – G.P.

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