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Investing Specialists

Retirees: Check Your Worry/Asset Ratio

Guess what? Small positions often contribute the lion's share of the angst.

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During the height of the bubble, one of my colleagues joked that a technology mutual fund had a high “ink/assets ratio.” Thanks to its aggressive strategy, then-booming performance, and press-savvy management team, the fund seemed to always find its way into the financial media, despite the fact that it didn’t have a lot of actual investor dollars in its portfolio.

I was thinking about that turn of phrase the other day, in the context of simplification strategies for retirees. Anecdotally, I’ve noticed that people sometimes have holdings with what I would call a high “worry/assets ratio” (or W/A ratio, for short). Even though these small positions won’t make or break the investor’s plan and may be there to provide a diversification benefit, they suck up a disproportionate amount of attention and oversight time and often cause real stress. In a very real sense, they’re more trouble than they’re worth.

Christine Benz does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.