What else besides fees should I consider in rebalancing my fund portfolio's asset allocation?
Taxes  Based on the numbers you quoted (-$360) it doesn't appear that you would have a taxable event if you sell all the shares in the account.  If you only sell some of the shares, to fund the new account, you should specify which shares you want to sell. If you sell only the shares that you bought when share prices were high, then every share you sell could be considered a loss. This will increase your losses. These losses can be deducted from your taxes, though there are limits. Fees Make sure that you understand the fee structure. Some fund families look at the balance of all your accounts to determine your fee level, others treat each fund separately.  Procedure If you were able to get the 10K into the new account in the next few months I would advise not selling the shares. Because it will be 6 to 18 months before you are able to contribute the new funds then rebalancing by selling shares makes more sense. It gets you to your goal quicker.  All the funds you mentioned have low expense ratios, I wouldn't move funds just to chase a the lowest expense ratio. I would look at the steps necessary to get the mix you want in the next few weeks, and then what will be needed moving forward. If the 60/40 or 40/60 split makes you comfortable pick one of them. If you want to be able to control the balance via rebalancing or changing your contribution percentage, then go with two funds.
"I think you might be asking the wrong question. You have plenty of capital on the side that can be invested. Instead of asking whether you should get an adviser, you might want to examine what your end goal is. Are you looking to build long term growth of you capital? Are you asking about and adviser because you don't want to handle your money, or is it simply because ""that's what people do?"" I would imagine that the answer to 1. is yes and that the answer to 2. is that you want to handle your money, and you always considered this something best left to the advisers. I shall proceed on these hypothetical assumptions. In my humble opinion, I would do the following: Skip the adviser and the fees that go with it. For a young professional like yourself, especially with an engineering background, you can certainly handle the education required to learn the mechanics of investing. Invest some time to learn the fundamentals of the market such as asset classes, basic terminology ect. You will benefit in several ways. For one, you will learn an invaluable skill and save tens of thousands in fees during your lifetime. Moreover, you will have complete control of your risk profile, allocation, and every penny that belongs to you. I really am not bashing advisers, but no one will care as much about your money as you will. And don't be fooled. The market is efficient. An adviser does not have any more edge in a market than anyone else. And from first hand experience, they rarely outperform benchmarks net of fees. I assume you have made it to this step because you want to manage your own money and financial future. Sounds scary, how should one proceed? Let's assume that $100,000 is ""in play"". And since you are learning the ropes, let's leave $50,000 in cash for now. This leaves $50,000 to start a portfolio. I'd start by building a core position of all the major asset classes in ETF form. This means buying things like SPY or TLT. If you're comfortable, you can start selling monthly calls against these positions to reduce basis and earn some income. The point is, your only limitation at this point is taking time to learn the ropes. The technology is there, the free education is there, and liquidity and product mix is there. Next thing you know you're learning how gamma scalping works, or maybe you're more of a Buffett type.  This is how I view finance in general, and truly hope you break through the initial barrier to controling your own finances." "Diversification is the only real free lunch in finance (reduction in risk without any reduction in expected returns), so clearly every good answer to your question will be ""yes.""  Diversification is good.""  Let's talk about many details your question solicits. Many funds are already pretty diversified.  If you buy a mutual fund, you are generally already getting a large portion of the gains from diversification.  There is a very large difference between the unnecessary risk in your portfolio if you only hold a couple of stocks and if you hold a mutual fund.  Should you be diversified across mutual funds as well?  It depends on what your funds are.  Many funds, such as target-date funds, are intended to be your sole investment.  If you have funds covering every major asset class, then there may not be any additional benefit to buying other funds. You probably could not have picked your ""favorite fund"" early on.  As humans, we have cognitive biases that make us think we knew things early on that we did not.  I'm sure at some point at the very beginning you had a positive feeling toward that fund.  Today you regret not acting on it and putting all your money there.  But the number of such feelings is very large and if you acted on all those, you would do a lot of crazy and harmful things.  You didn't know early on which fund would do well.  You could just as well have had a good feeling about a fund that subsequently did much worse than your diversified portfolio did. The advice you have had about your portfolio probably isn't based on sound finance theory.  You say you have always kept your investments in line with your age.  This implies that you believe the guidelines given you by your broker or financial advisor are based in finance theory.  Generally speaking, they are not.  They are rules of thumb that seemed good to someone but are not rigorously proven either in theory or empirics.  For example the notion that you should slowly shift your investments from speculative to conservative as you age is not based on sound finance theory.  It just seems good to the people who give advice on such things.  Nothing particularly wrong with it, I guess, but it's not remotely on par with the general concept of being well-diversified.  The latter is extremely well established and verified, both in theory and in practice.  Don't confuse the concept of diversification with the specific advice you have received from your advisor. A fund averaging very good returns is not an anomaly--at least going forward it will not be.  There are many thousand funds and a large distribution in their historical performance.  Just by random chance, some funds will have a truly outstanding track record.  Perhaps the manager really was skilled.  However, very careful empirical testing has shown the following: (1) You, me, and people whose profession it is to select outperforming mutual funds are unable to reliably detect which ones will outperform, except in hindsight  (2) A fund that has outperformed, even over a long horizon, is not more likely to outperform in the future. No one is stopping you from putting all your money in that fund. Depending on its investment objective, you may even have decent diversification if you do so.  However, please be aware that if you move your money based on historical outperformance, you will be acting on the same cognitive bias that makes gamblers believe they are on a ""hot streak"" and ""can't lose.""  They can, and so can you. ======== Edit to answer a more specific line of questions =========== One of your questions is whether it makes sense to buy a number of mutual funds as part of your diversification strategy.  This is a slightly more subtle question and I will indicate where there is uncertainty in my answer.   Diversifying across asset classes.  Most of the gains from diversification are available in a single fund.  There is a lot of idiosyncratic risk in one or two stocks and much less in a collection of hundreds of stocks, which is what any mutual fund will hold.  Still,you will probably want at least a couple of funds in your portfolio.  I will list them from most important to least and I will assume the bulk of your portfolio is in a total US equity fund (or S&P500-style fund) so that you are almost completely diversified already. Risky Bonds.  These are corporate, municipal, sovereign debt, and long-term treasury debt funds. There is almost certainly a good deal to be gained by having a portion of your portfolio in bonds, and normally a total market fund will not include bond exposure.  Bonds fund returns are closely related to interest rate and inflation changes.  They are also exposed to some market risk but it's more efficient to get that from equity.  The bond market is very large, so if you did market weights you would have more in bonds than in equity.  Normally people do not do this, though.  Instead you can get the exposure to interest rates by holding a lesser amount in longer-term bonds, rather than more in shorter-term bonds.  I don't believe in shifting your weights toward nor away from this type of bond (as opposed to equity) as you age so if you are getting that advice, know that it is not well-founded in theory.  Whatever your relative weight in risky bonds when you are young is should also be your weight when you are older. International. There are probably some gains from having some exposure to international markets, although these have decreased over time as economies have become more integrated.  If we followed market weights, you would actually put half your equity weight in an international fund.  Because international funds are taxed differently (gains are always taxed at the short-term capital gains rate) and because they have higher management fees, most people make only a small investment to international funds, if any at all. Emerging markets  International funds often ignore emerging markets in order to maintain liquidity and low fees.  You can get some exposure to these markets through emerging markets funds.  However, the value of public equity in emerging markets is small when compared with that of developed markets, so according to finance theory, your investment in them should be small as well.  That's a theoretical, not an empirical result. Emerging market funds charge high fees as well, so this one is kind of up to your taste.  I can't say whether it will work out in the future. Real estate.  You may want to get exposure to real estate by buying a real-estate fund (REIT).  Though, if you own a house you are already exposed to the real estate market, perhaps more than you want to be.  REITs often invest in commercial real estate, which is a little different from the residential market. Small Cap.  Although total market funds invest in all capitalization levels, the market is so skewed toward large firms that many total market funds don't have any significant small cap exposure.  It's common for individuals to hold a small cap fund to compensate for this, but it's not actually required by investment theory.  In principle, the most diversified portfolio should be market-cap weighted, so small cap should have negligible weight in your portfolio.  Many people hold small cap because historically it has outperformed large cap firms of equal risk, but this trend is uncertain.  Many researchers feel that the small cap ""premium"" may have been a short-term artifact in the data.  Given these facts and the fact that small-cap funds charge higher fees, it may make sense to pass on this asset class.  Depends on your opinion and beliefs. Value (or Growth) Funds.  Half the market can be classed as ""value"", while the other half is ""growth.""  Your total market fund should have equal representation in both so there is no diversification reason to buy a special value or growth fund.  Historically, value funds have outperformed over long horizons and many researchers think this will continue, but it's not exactly mandated by the theory.  If you choose to skew your portfolio by buying one of these, it should be a value fund. Sector funds.  There is, in general, no diversification reason to buy funds that invest in a particular sector.  If you are trying to hedge your income (like trying to avoid investing in the tech sector because you work in that sector) or your costs (buying energy because you buy use a disproportionate amount of energy) I could imagine you buying one of these funds. Risk-free bonds.  Funds specializing in short-term treasuries or short-term high-quality bonds of other types are basically a substitute for a savings account, CD, money market fund, or other cash equivalent.  Use as appropriate but there is little diversification here per se. In short, there is some value in diversifying across asset classes, and it is open to opinion how much you should do.  Less well-justified is diversifying across managers within the same asset class.  There's very little if any advantage to doing that." I am a firm believer in TD's e-series funds.  No other bank in Canada has index funds with such low management fees.  Index funds offer the flexibility to re-balance your portfolio every month without the need to pay commission fees.  Currently I allocate 10% of my paycheck to be diversified between Canadian, US, and International e-series index funds. In terms of just being for beginners, this opinion is most likely based on the fact that an e-series portfolio is very easy to manage.  But this doesn't mean that it is only for beginners.  Sometimes the easiest solution is the best one! :) You're missing the concept of systemic risk, which is the risk of the entire market or an entire asset class. Diversification is about achieving a balance between risk and return that's appropriate for you. Your investment in Vanguard's fund, although diversified between many public companies, is still restricted to one asset class in one country. Yes, you lower your risk by investing in all of these companies, but you don't erase it entirely.  Clearly, there is still risk, despite your diversification. You may decide that you want other investments or a different asset allocation that reduce the overall risk of your portfolio. Over the long run, you may earn a high level of return, but never forget that there is still risk involved. bonds seem pretty worthless, at least until I retire According to your profile, you're about my age. Our cohort will probably begin retiring sometime around 2050 or later, and no one knows what the bond market will look like over the next 40 years. We may have forecasts for the next few years, but not for almost four decades. Writing off an entire asset class for almost four decades doesn't seem like a good idea. Also, bonds are like equity, and all other asset classes, in that there are different levels of risk within the asset class too. When calculating the overall risk/return profile of my portfolio, I certainly don't consider Treasuries as the same risk level as corporate bonds or high-yield (or junk) bonds from abroad.  Depending on your risk preferences, you may find that an asset allocation that includes US and/or international bonds/fixed-income, international equities, real-estate, and cash (to make rebalancing your asset allocation easier) reduces your risk to levels you're willing to tolerate, while still allowing you to achieve returns during periods where one asset class, e.g. equities, is losing value or performing below your expectations. The first step I would do is determine the asset class mixture for your current portfolio and the mixture for your new one. If they are the same and all you are doing is changing the funds that you use to invest in that mixture of asset class then just do the change all at once. In this case there is no market risk as you are just swapping funds (hopefully to ones that you feel will better track the underlying asset classes).  If you are also changing your asset class mixture, then it depends on how large the change is. I would still do the whole change at once. But if you are worried about fluctuations then you could slowly rebalance into your final position by taking a couple of intermediary steps. I would still change all of the fund first but maybe in a mix closer to your current asset mix and then over the next couple of months adjust the ratios to reach your final desired asset mix. It's incredibly difficult to beat the market, especially after you're paying out significant fees for managed funds. The Bogleheads have some good things going for them on their low cost Vanguard style funds. The biggest winners in the financial markets are the people collecting fees from churn or setting up the deals which take advantage of less sophisticated/connected players. Buy, Hold and Forget has been shown as a loser as well in this recession. Diversifying and re-balancing however takes advantage of market swings by cashing out winners and buying beaten down stocks. If you take advantages of general market highs and lows (without worrying about strict timing) every few months to re-balance, you buy some protection from crashes in any given sector. One common guideline is to use your age as the percentage of your holdings that are in cash equivalents, rather than stocks. At age 28, at least 28% of my account should be in bonds, real estate, commodities, etc. This should help guide your allocation and re-balancing strategy. Finally, focusing on Growth and Income funds may give you a better shot at above S&P returns, but it's wise to hold a small percentage in the S&P 500 as well. I think the main question is whether the 1.5% quarterly fee is so bad that it warrants losing $60,000 immediately. Suppose they pull it out now, so they have 220000 - 60000 = $160,000.  They then invest this in a low-cost index fund, earning say 6% per year on average over 10 years.  The result: Alternatively, they leave the $220,000 in but tell the manager to invest it in the same index fund now.  They earn nothing because the manager's rapacious fees eat up all the gains (4*1.5% = 6%, not perfectly accurate due to compounding but close enough since 6% is only an estimate anyway).  The result: the same $220,000 they started with. This back-of-the-envelope calculation suggests they will actually come out ahead by biting the bullet and taking the money out.  However, I would definitely not advise them to take this major step just based on this simple calculation.  Many other factors are relevant (e.g., taxes when selling the existing investment to buy the index fund, how much of their savings was this $300,000).  Also, I don't know anything about how investment works in Hong Kong, so there could be some wrinkles that modify or invalidate this simple calculation.  But it is a starting point. Based on what you say here, I'd say they should take the earliest opportunity to tell everyone they know never to work with this investment manager.  I would go so far as to say they should look at his credentials (e.g., see what kind of financial advisor certification he has, if any), look up the ethical standards of their issuers, and consider filing a complaint.  This is not because of the performance of the investments -- losing 25% of your money due to market swings is a risk you have to accept -- but because of the exorbitant fees.  Unless Hong Kong has got some crazy kind of investment management market, charging 1.5% quarterly is highway robbery; charging a 25%+ for withdrawal is pillage.  Personally, I would seriously consider withdrawing the money even if the manager's investments had outperformed the market. The idea of an index is that it is representative of the market (or a specific market segment) as a whole, so it will move as the market does. Thus, past performance is not really relevant, unless you want to bank on relative differences between different countries' economies. But that's not the point. By far the most important aspect when choosing index funds is the ongoing cost, usually expressed as Total Expense Ratio (TER), which tells you how much of your investment will be eaten up by trading fees and to pay the funds' operating costs (and profits). This is where index funds beat traditional actively managed funds - it should be below 0.5% The next question is how buying and selling the funds works and what costs it incurs. Do you have to open a dedicated account or can you use a brokerage account at your bank? Is there an account management fee? Do you have to buy the funds at a markup (can you get a discount on it)? Are there flat trading fees? Is there a minimum investment? What lot sizes are possible? Can you set up a monthly payment plan? Can you automatically reinvest dividends/coupons?  Then of course you have to decide which index, i.e. which market you want to buy into. My answer in the other question apparently didn't make it clear, but I was talking only about stock indices. You should generally stick to broad, established indices like the MSCI World, S&P 500, Euro Stoxx, or in Australia the All Ordinaries. Among those, it makes some sense to just choose your home country's main index, because that eliminates currency risk and is also often cheaper. Alternatively, you might want to use the opportunity to diversify internationally so that if your country's economy tanks, you won't lose your job and see your investment take a dive. Finally, you should of course choose a well-established, reputable issuer. But this isn't really a business for startups (neither shady nor disruptively consumer-friendly) anyway.