Hey Dear Friends, Have you invested in Mutual Funds? Do you know that which is the best Mutual Funds in India? and In How Many Mutual Funds You Should Invest? Ok… lets talk about How many Mutual Funds You Should typically have in Your Portfolio?
How Many Mutual Fund You Should Invest?
Talking about how many funds you need to have in a portfolio whether you are investing a 1000 rupees whether you’re investing a lakh of rupees.
I think there is a gradual growth that you need to maintain in terms of the funds you add.
For instance, you were investing a 1000 rupees it might be sensible not to have more then 2 funds in your portfolio and at any point in time if you are going to your investment that you are making.
I would recommend not having more then 4-5 funds in a portfolio.
Over diversifying within a mutual fund portfolio often leads to a situation in where, there is a very lap in stocks of those particular funds or holdings and while you might be thinking on paper that you have diversified invested in 10 funds instead of 5.
This situation could actually lead to under-performance of your portfolio, hence, it is sensible not to have a way to many funds or obviously have funds cross-category such as large-cap, mid-cap, multi-cap, balanced funds, sectoral funds and add them gradually as and when they are relevant to your investment horizon when they are relevant to your risk taking capacity.
Quality vs Quantity of Mutual Funds
Focus on selecting good funds and have only selected 4 to 5 funds, exceeding your funds quantity is not good always.
It is better to have quality and high return mutual funds instead of having 10 to 12 Raddi funds in your portfolio.
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