By Scott Ronalds

I enjoy periodically perusing the list of new investment products, as there’s usually a good laugh in there somewhere (remember the FocusShares ISE-Reverse Wal-Mart Supplier ETF, and my favourite, the HealthShares Dermatology and Wound Care ETF). It also serves as a reminder why I only own five well-diversified funds. The ‘less is more’ approach helps keep things clear and on-track. Less clutter, more simplicity.

Consider some of the latest offerings that have hit the market. There’s the FlexShares Global Quality Real Estate Index Fund, the Franklin Short Duration U.S. Government ETF, the ALPS Alerian Energy Infrastructure ETF and the WisdomTree Korea Hedged Equity ETF, among others.

These are all narrowly-focused funds, meaning they target a very specific asset class or region. Suppose one of them piques your interest and you decide to add it to your portfolio. A number of questions arise (hopefully). How much of your portfolio should it represent? Does it fit with your asset mix? Will it overlap (and dilute) other investments you own? How will it impact your overall costs? Does it represent good value or is it a marketing ploy? What are your return expectations and what will you measure it against? Do you need to sell something to raise money for the purchase, and if so, what? How long do you intend to hold it? If you view it as a tactical, shorter-term investment, when do you plan to sell it?

Rather than slicing and dicing my portfolio and constantly running into these questions, I prefer to keep it simple and rely on the skills and experience of our managers to determine how much exposure I want in Korea, which Wal-Mart suppliers I own, and whether I need any Polysporin.