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Q&A: Smaller Accounts

Q: I have been managing my own portfolio of mutual funds and ETFs using the NoLoad FundX newsletter.   My dilemma now is building a portfolio for a small IRA.  Building a portfolio of 10 or more funds means taking very small positions, and doesn’t seem practical.
A:  Managing smaller accounts can be challenging.  Since most mutual funds have minimum investments of $2,500-$5,000, a smaller portfolio may only be able to hold a handful of mutual funds and lack the diversification of a larger portfolio.  Trading fees may be low at a discount broker, but as a percent of each transaction, those fees can add up.  Including a fixed income component to your portfolio means adding even more funds to the mix.

This is where using one or more of the FundX Upgrader Funds can be a very viable remedy.  With as little as a $1,000 purchase, you can access a complete portfolio of underlying mutual funds.  To understand this, think of the FundX Upgrader Fund (FUNDX), which generally holds over 30 funds and ETFs.

Imagine if you were able to invest that $2,500 in the 30 underlying funds and ETFs that FUNDX owns.  It would mean buying just $250 worth of the largest position in the portfolio – and buying a $25 in the smallest position. Click here current holdings of the FundX Upgrader Fund

Given the minimum investment requirements of most funds, it would be impossible to construct a portfolio with such small positions in so many funds, but that’s just the kind of diversification provided by a single $2,500 position in an Upgrader Fund.

Because FUNDX primarily invests in core, diversified growth funds, we believe it can serve as the foundation of a growth portfolio.  For investors looking to add fixed income to their portfolios, the FundX Flexible Income Fund (INCMX) provides investors with a mix of bond funds and ETFs in a single purchase – and INCMX can also be used as a potential stabilizing component of a balanced portfolio.

Access to Market Trends
The portfolios of the FundX Upgrader Funds are actively managed and the funds’ portfolios change in response to changing market conditions. The Funds seek to take advantage of market trends and are able to easily move among different areas of opportunity as they arise, such as large cap and small cap, value and growth, and international and domestic.


  • Small- and medium-capitalization companies tend to have limited liquidity and greater price volatility than large-capitalization companies.
  • Investments in foreign securities involve greater volatility and political, economic and currency risks and differences in accounting methods.
  • ETF Trading Risk – Because the funds invest in ETFs, they are subject to additional risks that do not apply to conventional mutual funds, including the risks that the market price of an ETF’s shares may trade at a discount to its net asset value ("NAV"), an active secondary trading market may not develop or be maintained, or trading may be halted by the exchange in which they trade, which may impact a Fund’s ability to sell its shares.

Diversification does not assure a profit or protect against a loss in a declining market.

References to other funds should not be considered an offer of these securities.

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