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How Many Fund Holdings Is Too Many?

You might be surprised at just how low you can go.


Here's a question that seems simple but, like many investment topics, can be tricky to answer: How many funds should you own in a given account in your investment portfolio?

The bottom line is that there's no single number that's right for everyone. If you want to keep things simple, you can go with as few as one (think target-date funds), three, or five funds that cover the core asset classes. (You won't be alone if you go for the Marie Kondo approach to your mutual fund investments. According to the Investment Company Institute's 2018 "Profile of Mutual Fund Shareholders," more than half of U.S. households own four or fewer funds--likely owing to the predominance of target-date funds.)

Josh Charlson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.