A friend was telling me about a discipline she enforces in her household - if anyone brings a new piece of clothing into the house, they have to get rid of something. It keeps the drawers and closets in reasonable shape and brings a little discipline (very little) to purchase decisions.

I can’t say our household has latched on to this idea, although Lori and I could probably get rid of two items for every new one and not run out of clothes for ten years.

Cranston, Gaskin, O’Reilly & Vernon (CGOV), the manager of our Equity Fund, has a similar approach. They have capped the number of stocks they will own at 25. If they are at that number and want to buy a new stock, they have to sell something. It’s not a rule that works for everyone, but I really like it. They are forced to constantly assess what they already own and keep the portfolio fresh. With only 20-25 stocks, they can’t go to sleep on a stock because every one has a significant impact on the fund’s performance.

I wish the wealth management industry had the same discipline as my friend and CGOV. Yesterday I opened my daily email from Investment Executive magazine to find announcements for 10 new funds from 5 fund companies. This was just one day’s worth of news.

• Investors Group (2) – ‘Global Real Estate’ and ‘Monthly Income and Global Growth’
• AGF (3) – quantitative funds managed by their subsidiary, Highstreet Asset Management – ‘Canadian All Cap Equity’, ‘Global High Income’ and ‘Global Balanced High Income’
• ING (1) – an index-based fund, the Streetwise Fund
• Mackenzie (3) – target date funds (2015, 2020 and 2025) called ‘Destination+’
• RBC (1) – ‘ O’Shaughnessy U.S. Growth Fund II’, a follow-along to the previously closed fund

These announcements prompt a few comments.

First, it’s notable that there were no announcements as to which existing funds were being closed, or put out on the front porch for the Salvation Army to pick up.

Second, the trend continues whereby the words Income or Monthly Income or High Income keep showing up in fund names. I can’t help but think these words, which were magical a few years ago, have become hackneyed, and maybe even deceiving.

Finally, the Mackenzie announcement is a testament to the proliferation of ‘life cycle’ or ‘target date’ funds. Mackenzie is just one of a long list of firms that have recently added this type of product to their lineup. These funds are kind of nifty (in the near future I’ll do a post on their merits and demerits), but it’s feeling to me like another fad gone bad. A few years from now we’ll have a bunch of uneconomic funds cluttering up the already cluttered mutual fund shelves. Do you remember ‘Clone funds?’

It’s obvious that I’m a cynic when it comes to our industry’s product proliferation. I think we have gone way beyond the point where investors benefit from variety. My wish for 2008 is for one of the mega firms to do a slew of fund mergers and cut their lineup from 100 funds to 10, and pass on the cost savings to their unitholders. OK, maybe 20 funds.