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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 (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.