The slam-dunk stock pick can be an elusive creature. Fortunately for us, however, the key to long-term investing is within sight. In fact, it's right inside our portfolios -- if they're diversified.
And so to assemble a portfolio built for the long haul, you'll need to find "keepers" that provide high-quality exposure to the domestic market's various cap ranges and international equities from both emerging and developed markets.
Plus, as you get closer to retirement, fixed-income investments should play a bigger role in your portfolio. I'd argue that smart investors who need bond exposure should spread their investments across the market's various forms of corporate and government debt.
Scratching your head yet?
Make no mistake: Researching and assembling a portfolio of individual securities that meets the criteria outlined above would be tough even if you've got all the time in the world. Plus, you'll probably be inclined to sift through reams of SEC filings and corporate earnings reports. No fun at all.
Good thing there's a simple solution: mutual funds.
Opportunity
knocks
Mutual funds are the investment vehicle of choice for more than 90 million of us. And I'm willing to bet that even most of you stock jocks out there probably own at least a couple. Go ahead and admit it.
The problem is that all too often even savvy investors neglect their fund holdings, failing to make the right choices when IRA and 401(k) election time rolls around -- even though these accounts may hold their biggest investments.
Talk about a lost opportunity. Mutual funds make it easy to execute your asset allocation game plan -- and you do have one of those, right? -- with choice offerings from just about every inch of both the domestic and international markets.
We have a winner
Indeed, our best performer at Champion Funds -- the Fool newsletter with my name on it -- has been Dodge & Cox International Stock (DODFX). This value-oriented fund -- which recently counted Royal Dutch Shell
We've had plenty of success with our domestic picks, too. For example, the now-closed Royce Premier (RYPRX) -- a domestic small-cap that has made room for bigger players such as Claire's Stores
Personalized pie chart
Although mutual funds can make it relatively easy to fill in the gaps of your personalized portfolio pie chart, not just any old fund will do. Indeed, among other things, Foolish investors should insist on reasonable price tags, seasoned (and successful) management teams, and stock-picking strategies that won't keep you up at night. (We all need our beauty rest, right?)
These, not coincidentally, are precisely the picks we tap for our newsletter. And with more than two years under our proverbial Champion Funds belt, we appear to have a recipe for success. As I type, our list of recommended funds has trumped the market by more than 11 percentage points since we first opened for business.
If you'd like to take a gander at our entire list of recommendations -- as well as our back pages, model portfolios, and members-only discussion boards -- just click here to snag an absolutely free 30-day guest pass. I suspect that you and your portfolio of funds -- and you know you have one, Fool -- will be happy you did.
Shannon Zimmerman, lead analyst for Motley Fool Champion Funds, owns shares of Royce Premier. Royce Premier and Dodge & Cox International Stock are Champion Funds picks. Vodafone and Federated Investors are Inside Value recommendations. GlaxoSmithKline is an Income Investor recommendation. The Fool is investors writing for investors, and you can read all about our disclosure policy by clicking right here.
