Can I have just one fund?
Do you believe in having just one fund in your portfolio, like a CI Global Boomernomics GIF Fund? – A.C.
You know the old saying about not putting all your eggs in one basket? What you’re suggesting is exactly that — putting all your money into a single fund and hoping that it does well.
Maybe you’ll get lucky. The fund you mention gained 51.1% in the year to Sept. 30. But if the fund underperforms or, worse, loses money, you’re not going to be a happy camper.
One of the keys to investment success is proper diversification. Mutual funds offer that because they hold a number of securities in their portfolio. But the manager must operate within the mandate he or she is given. A money market fund won’t invest in stocks. A Canadian equity fund won’t invest in foreign bonds. A resource fund won’t invest in science and technology.
So to have a well‑diversified portfolio, you need to hold more than one fund. The CI Global Boomernomics Fund is a good one, with a global mandate, a balanced approach, and an excellent record so far. But it has not been around for very long, so we don’t know how well it will do over five or 10 years. The GIF (segregate version provides a guarantee against loss after a 10‑year hold, but that’s a long time to wait if the fund should go into a prolonged slump.
The bottom line is that a single fund approach will add considerably to your risk. You are much more likely to find yourself worrying about day‑to‑day performance than you would if you invested in a more diversified portfolio.
It is not a course I would recommend. ‑ G.P.