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Why shouldn't you have too many mutual funds in your portfolio? We explain 

Indian investors have a lot of choices when it comes to investing in equity funds, with at least 300+ options for investors to choose from.

Most investors start investing in a few funds, but then continue to add new funds to their portfolio without reviewing or cleaning up their mutual fund portfolio.


Diversification does not mean that you keep adding new funds to your portfolio.


Investing in too many funds is redundant and beyond a point, there are no additional (diversification) benefits.


For large cap funds, 1-2 active large cap funds and 1 large cap index fund is more than enough.


For mid-&-smallcap exposure, 1-2 proven, well-managed, active midcap funds and 2-3 smallcap funds are advised.

For flexicap funds, 1-2 funds are enough provided there is style diversification.

The total exposure to midcaps and smallcaps across all funds combined should be limited to a maximum of 30-40%.

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Why shouldn't you have too many mutual funds in your portfolio? We explain

To diversify and reduce risks, it is sufficient to have 1-2 funds in each fund category, assuming one doesn't have too many fund categories in their portfolio.

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