How should I diversify from Fidelity?

Just a little background...I'm currently 22 yrs old active duty enlisted making E-4 pay, opened up a Roth IRA through Fidelity because my parents were investing with them right before basic training in '04.

I really didn't know how to invest but I have invested the maximum amt each year and went by the so-called Hot hands funds approach and basically picked up new funds as I felt I was getting too concentrated in a certain sector. In retrospect I ended up concentrating quite a bit of it in international funds.

These are the funds that I am in right now.
FEMKX, FFFHX, FHKCX, FLATX, FSCOX and am looking at about 26k in my Roth.

I feel like I've been doing well overall but I'd hate for my little portfolio to tank on me. What's a good approach to seek out other companies to invest with especially if you are like me and have everything sitting in Fidelity funds right now? Thanks for your time.

personally, i hate fidelity.

that said ...

quit worrying. your money is not AT fidelity. it is not WITH fidelity. it is invested in a few thousand companies around the world. if fidelity went bankrupt today, you would not lose a penny.

be careful ... when you know a "little" you can end up being a danger to yourself or to others. few professionals in this industry (myself included) know what a "hot hands funds approach" is .... and few would bother to even run a google search for it.

finally, my recommendation would be to hire a professional. you wouldnt get sidetracked by "hot hands" and you would get more than 2 minutes from an anonymous poster on the internet.

I've been with Fidelity for 16 years and have had no problems with them. I am, however, on the cusp of selling my remaining 2 sector funds with them. One is FSELX (Fidelity Select Electronics), which I bought in the 90's and sold right before the Y2K scare (I thought people were going to panic, not a glitch in the computer system). I sold for a heavy profit, and in early 2000 when I saw that the sky had not fallen, I repurchased.

Then the sky fell!

I am still about 50% down after 7 years, and have finally realized I will never get back to square one and should take the BIG loss (although the optimist in me sees it as a wash overall, since I profited before I repurchased). The realist in me thinks the optimist is an idiot. The nutcase in me is typing it all down and unintentionally hijacking this thread.

MaoKhan;

I don't necessarily hate Fidelity, but I do think that they have a tendency to sell what is basically the same fund under different names, so you really have to do your homework when evaluating their offerings. However they do have a broad product array, and you can pretty much cover all sectors of the market with them.

Other fund companies can give you exposure to different investment philosphies and styles that could be considered a form of "diversification." Vanguard touts a low-cost approach that is certainly worth considering. Other companies such as T.Rowe Price and Janus represent active management styles that may or may not suit your risk tolerance. American Funds are broker sold funds that have a great reputation for aligning the interests of the fund managers with those of the shareholders.

That you are saavy enough to recognize that you may be overexposed to international investments says to me that you have already started to educate yourself. I would encourage you to keep at it. That way you can ultimately decide if you are comfortable with a "do it yourself" approach (as I have been for nearly 20 years) or if you want to work with an advisor.

Best of luck, and to all of you in uniform -- thanks for all you do for us.

Most of your funds have done very well. That said, if you look back to the "bear days", all of funds did poorly for years 2000, 2001, 2002. So, for the last few years the market has been bullish, but I would just be careful and look at other funds that perhaps faired better during bear markets and those funds are not necessarily bond funds either. Some of your funds are relatively new and have no track record to speak of. Yes they have done well but just be aware that, from history 3 bad years of performance, like they all had could wipe out some profits. Its the fund and manager that matters to me and not so much the company, so look around with this in mind.
good luck.

There are many good mutual fund companies. I am most familiar with no load mutual funds so I can provide you with a few companies such as Vanguard, T. Rowe Price, Dodge & Cox, Royce and Metropolitan West. No one mutual fund company is the best at all investment strategies. T. Rowe Price is very good at domestic equity strategies while Royce specializes in smaller cap value investments. For fixed-income, Vanguard, Metropolitan West, Fidelity and T. Rowe Price are all very good.

I can not provide you with personalized investment advice but I will say that you are right to be concerned about your allocation, as most of these funds have performed exceptionally well and could decline substantially if emerging markets go out of favor. Your primarily aggressive equity/emerging markets allocation indicates that you have an very high tolerance for risk. Your risk tolerance is the most important factor to consider when constructing a portfolio. Unfortunately, many people cannot accurately assess their risk tolerance until they are losing money.

I do not necessarily think there is anything wrong with an aggressive all equity allocation for you. Actually, most young people are primary invested in equities and probably should be. It is your heavy overweight in emerging markets that I would be most concerned about.



I hope this helps.

Michael Weiss
The Editor
The Mutual Fund Investor
http://www.mutualfundinvestor.net

I have almost the same kind of portfolio with fidelity with huge amount of money in china and latin amerca, select gold and wireless, and select natural resources. One thing i like about fidelity is that u can play on month to month basis without any fees so keep changing the funds. The investments are risky but at 27 i think i should take more of a rick with my money then in later years...

Any advice gurus????

Fidelity is not a bad company. They may not appeal to your interest or investment. I like fidelity because of the low fees, no load mutual funds.

I have $40,000 in my fidelity portfolio including Freedom fund, which has done very well. All my other mutual funds have also performed well. I also have a Vanguard fund with $23,000. I like Vanguard's Index funds. They are a good long term, low fee investment opportunity. So most of my funds are index. I'm 22, yes I have the money and the time to be more risky but I would secure your portfolio and your future before you buy any extravagant funds.

QK