How to Build a Portfolio You Don't Have to Babysit

These 4 steps can help you craft a (mostly) hands-off portfolio.

Christine Benz 12 April, 2021 | 3:08AM
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Baby crawling through door

Morningstar once conducted research that looked at what would happen if the holdings in mutual fund portfolios were frozen in time, with no further changes over the following year. The surprising conclusion? The portfolios that assumed no further adjustments tended to beat the returns of the actual portfolios, which reflected the fund managers’ trading activity. In other words, the funds would have performed better had the managers stood pat rather than trading.

Investors should take that finding to heart when they manage their own portfolios, too. While some investors swear by frequent monitoring and rebalancing tweaks, I’ll take a policy of benign neglect any old day.

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About Author

Christine Benz

Christine Benz  Christine Benz is Morningstar's director of personal finance and author of 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances and the Morningstar Guide to Mutual Funds: 5-Star Strategies for Success. Follow Christine on Twitter: @christine_benz.

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