11-11-2014, 08:16 AM
Here is one approach that I like. Start the sector exposure via an acceptable ETF. Then, begin DD on the individual holdings in the ETF. Finally, begin to enrich the weighting of favorites by buying those individually. One can end up having more diversity than with purely individual picks, but can also alter the weighting of holdings with the addition of just a limited number of additional positions. The one thing that I like least about ETFs is that so many of them are market cap weighted to the extent that the top five holdings represent extremely high weightings compared to those of the smaller cap companies.
Of course the approach that I usually like best is what might be called the 'small basket' approach. Cherry pick 4-5 tickers from the sector of interest. Five tickers gives adequate diversity yet also gives one the freedom of making his/her own picks. That is where I'm am with REITs. Holdings include: CSG HCP O SNH. Perhaps will eventually add one more ticker to the group.
Of course the approach that I usually like best is what might be called the 'small basket' approach. Cherry pick 4-5 tickers from the sector of interest. Five tickers gives adequate diversity yet also gives one the freedom of making his/her own picks. That is where I'm am with REITs. Holdings include: CSG HCP O SNH. Perhaps will eventually add one more ticker to the group.
Alex