Q: I just want to clarify your suggestions for starting position and maximum position for individual stocks in a portfolio. From context it appears that 2%, 5% and 7% and 8% in your following answer from some time ago relate to percentage of the equity portfolio only, not the total portfolio which includes fixed income and cash. Can you confirm that these percentages do in fact relate to only the equity part of the portfolio. I mean, I may veer from these, but I like to have some idea of a norm so I know how much I'm veering. The extract of your answer I'm referencing is:
"What the right size of a position is comes down to some personal factors but we think a minimum, 2% position is a good starting point. This would lead to an average portfolio of 50 securities, which is a bit high in our view but at least manageable. In terms of maximum allocation, we would tend to target a 5% maximum starting position and look to rebalance as positions drift higher than this. At 5%, you would have a portfolio of 20 holdings which allows diversification but each holding contributes meaningfully to returns. We are fine letting big positions run to 7% and 8% ..."
"What the right size of a position is comes down to some personal factors but we think a minimum, 2% position is a good starting point. This would lead to an average portfolio of 50 securities, which is a bit high in our view but at least manageable. In terms of maximum allocation, we would tend to target a 5% maximum starting position and look to rebalance as positions drift higher than this. At 5%, you would have a portfolio of 20 holdings which allows diversification but each holding contributes meaningfully to returns. We are fine letting big positions run to 7% and 8% ..."
