Wednesday, April 25, 2012

Shrinking Universe

AM reading: Common Sense of Mutual Funds by John Bogle.  Here is a really cool insight:

Page 359: he is writing about the fact that given normal restrictions (not owning more than 2% of portfolio in any single asset and not owning more than 5% of shares of any individual company), the number of potential investments drops significantly.  For example, using 2009 data, a 1 Billion fund could invest in any of 1,927 firms.  However a $20 billion fund would only be able to choose from 251 firms. 
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