Business

How many funds you should have in your portfolio?

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Diversify portfolio

 

Investors diversify their mutual fund portfolios because they have different life goals and objectives that need to be achieved over various time periods.

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Different asset classes

Requires investing in different asset classes such as equity, fixed income, and gold, or a combination. Portfolios need to be diversified across asset classes, different schemes.

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One scheme, one purpose

Investors have more than one scheme in their portfolios because each scheme serves a different purpose. 

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What kind of fund for future?

For future expenses like children's education or a planned holiday, an equity savings fund may be suitable.

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Long term goal

Target maturity funds can be used to save money for long-term goals, while gold funds act as a hedge against inflation. 

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Small cap funds

On the equity side, small-cap funds can generate alpha and help achieve goals that are 10 years away, while ELSS funds provide tax-saving benefits.

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Specific themes

Investors looking for specific themes or international exposure can invest in technology funds, thematic funds, or geographically diversified funds.

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How to reduce themes?

To reduce number of schemes in a portfolio, investors can check for overlaps with similar schemes. If there is high overlap, adding another fund may not provide additional returns.

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