Q: I use the 10 asset classes you recommend in the ultimate buy and hold portfolio. What are your thoughts on including additional sectors such as consumer staples, consumer discretionary, financials, energy, IT, utilities and health care?
A I think there are lots of steps we can take that might have a small impact on our long-term returns, but most of them make the process more complicated and require more attention. All of the sectors you mentioned are part of the 10 asset classes in my portfolio. If I decided to add money to a sector or asset class, in the hope of getting a better return, I would simply add more money to the small cap value asset class. I could do that by adding a little to my U.S., international and emerging market small cap value positions.
I think the key is to make it as simple as possible and eliminate the necessity to stay on top of any particular sector. For many investors evaluating sectors are part of the fun of investing. I’m not looking for any fun from my portfolio.