Investors who have an unlimited amount of cash usually have no problem creating a diversified investment portfolio. However, middle class investors often find this task to be difficult and costly, due to the fact that an individual needs to pay a brokerage commission each time shares from any given company are purchased or sold. The numerous commissions naturally cut into a person’s profits, making the prospect of creating a diversified portfolio unprofitable financially.

Fortunately, there is a way about this dilemma. Merrill Lynch has recently created a new type of investment portfolio that includes various share types; this portfolio can be purchased in its entirety and includes stocks and shares from well over a dozen well known companies. These investment folders are called HOLDRs, which stands for holding company depository receipts.

These stocks are traded as a single security, which means that they must be bought and sold as a package. Additionally, a person cannot pick and choose which company shares will be included and how many shares from each company will be in any given HOLDR package. There are presently 17 different HOLDR packages available from Merrill Lynch; each package includes shares from a single industry, i.e. broadband, telecommunications, banks, etc. Naturally, the cost of a HOLDR folder will vary, depending on which folder a person purchases.

Besides the ability to own a diversified portfolio, there are a few other advantages to buying a HOLDR folder. These folders can be exchanged for securities at any time the investor would like to make the exchange and the exchange is tax free. Additionally, a person who owns a HOLDR folder would still be able to benefit from regular shareholder perks such as annual reports and monthly or yearly dividends.

Buying a HOLDR folder does not necessarily come cheap; in fact, an investor can expect to pay well over $10,000 for such a folder. HOLDR folders are not perfect in every way; they do have their disadvantages. However, as many investors have found, having a diversified investment portfolio is ideal. Such a portfolio enables a person to turn a profit on his or her overall investment even if one or two companies unexpectedly lose value. Merrill Lynch’s new HOLDR folders are the best option for those who want to diversify their investments, as a person who buys such a folder would only need to pay a single purchase commission for the entire investment package.