The Memorisable Portfolio Rule
If you can't recite every fund you own from memory, your portfolio is too complex.
Nakisa's personal heuristic: he must be able to memorise every fund he owns and recite them from memory. In practice this caps him at around five funds. The rule is not about the number — it is about a forcing function for understanding.
Complexity does not break portfolios; behaviour does. The more moving parts you own, the more you have to monitor, rebalance, and explain to yourself in a crisis. Each extra fund increases the chance you panic-sell something you don't fully understand.
With modern global all-cap and global aggregate bond funds, two products can give world-wide stock and bond exposure. The case for owning twenty is almost always narrative-driven, not structural.
- Every fund you cannot name from memory is a fund you cannot manage in a crisis.
- Diversification is a property of holdings, not of count.
- More funds = more rebalancing decisions = more chances to err.
- Two global funds (equity + bonds) already give world-wide diversification.
- List every fund you own across every accountPull a single list across ISA, SIPP, GIA, workplace pension and any legacy accounts. Most investors are surprised how long the list is once consolidated.
- Try to recite the list from memoryClose the laptop and write out every fund and roughly what it does. Every fund you cannot recall is a candidate for removal.Pro tipIf you can't explain a fund's role in one sentence, that is a stronger signal than forgetting its name.
- Identify overlaps and duplicatesPlot the price history of any two funds you own — if they crash together and rally together (March 2020 is a clean stress test), you are paying twice for the same exposure.Pro tipA global index already contains REITs and US large caps — adding S&P 500 and a REIT fund on top is almost always doubling up.
- Collapse to a target count you can namePick a count — 2, 3 or 5 funds — that you can recite. Map each remaining fund to a specific job (global equity, global bonds, money market, REIT). Sell the rest.WarningWatch CGT in unwrapped accounts — phase the consolidation to use annual allowances.
- Set a 'no new fund' defaultMake adding a new fund a conscious decision: it must replace an existing fund or fill a documented gap. Default to no.
A 21-year-old listener had a global all-cap fund in both his ISA and SIPP and asked if it was redundant. Nakisa said no — if both have the same long-term goal and time horizon, owning the same global fund in both wrappers is exactly right.
Nakisa repeatedly sees investors hold a global index, an S&P 500 ETF, and an S&P 500 clean-energy ETF together. Because each contains the largest US companies, the combination is a heavy concentrated bet on US mega-caps.
After years running a complex, asset-allocation-style portfolio that mirrored his strategist habits, Nakisa was challenged by a member of his community to simplify. He set himself the rule that every fund had to be memorisable — which naturally collapsed the portfolio to about five holdings.
The rule emerged as a counter to the industry default of constantly adding products: 'remember that when you complicate things it just makes it more breakable, and what breaks it is your behavior.'