Hi,
I think you're asking both about what's traditionally referred to as "balance" and also about what's sometimes referred to as "slicing and dicing."
A balanced portfolio, for its part, usually means one with an allocation of both risky assets (typically stocks) and non-risky assets (typically bonds). While there's some dispute about whether or not someone with 25 years left to invest should really own bonds (search for Jeremy Siegel, stocks and time horizon for a view that you don't need them) the general consensus is that you should indeed have some bonds. One easy way to get a consensus recommendation for an appropriate bond percentage is to choose the TIAA-CREF Lifecycle Fund for your intended retirement year.
Slicing and dicing typically refers to the stock portion of people's portfolios. Some people use it to mean buying multiple stock funds to represent multiple (indeed sometimes all) slices of the market, others use it to refer to "tilting" to particular slices of the market that have done well in the past (small stocks and value stocks). If you want to slice and dice in either sense, I don't think there's any particular problem with doing so, as the expense ratio you pay will be the average of the expense ratios of the various funds rather than the sum. On the other hand, TIAA CREF has only recently improved its offerings for slice and dicers, and particularly if you're just working with the variable annuities, for example, your options for "tilting" would be quite limited. CREF-Stock is a good diversified fund in and of itself, and if I were choosing among the VA accounts alone I'd probably use it alone for my stock allocation rather than bringing in Growth, Global Equities, and Equity Index.
So I guess the bottom line is that while you're correct in thinking that the types of funds you buy (asset allocation) make less of a difference than your savings rate when you're just starting out, it's not necessarily correct that a one-fund portfolio will have lower fees than a multi-fund portfolio.
All best,
Pete
