diversification Archives – Vipin Khandelwal

How many funds do you have in your portfolio?

“I will have to count.”

After 10 minutes.

“It is 32 funds.”

Did you say 32?

“Yes.”

What are these many schemes doing in your portfolio?

“Diversification.” It was mentioned as a matter-of-fact.

What does having 32 Mutual Funds in your portfolio mean?

Let’s understand this in two parts.

Part 1: It means a lot.

You believed in the theory that about 25 to 30 stocks make a good diversified portfolio and hence that would be true for mutual funds as well.

You believed that diversification is the best bet against ignorance or so said the Oracle of Omaha – you don’t exactly know the right fund to invest in and hence accumulate many – at least some will perform.

“Have you seen the movie Kai po che?” Vijay suddenly threw this question at me. We had just finished seeing another movie and were driving back home.

“Yes, I have. It was on TV a few weeks ago.” I replied casually.

“Did you like it?” he asked.

“Yes, I did. A lot.”

“Do you know it is based on Chetan Bhagat’s book 3 mistakes of my life?” he continued.

“Oh! I didn’t know that. I haven’t read the book, in fact, none of Chetan Bhagat’s books.” I said with a tone mixed of curiosity and surprise.

“Even I haven’t read it. I got the information from one of the reviews of the movie,” said the movie buff with a twinkle in his eyes. I smiled.

There was a short pause.

I got thinking. I turned to Vijay, who was driving, and asked, “What about the 3 investment mistakes of your life?”

The 32 fund portfolio – Diversification vs Diworsification

What does having 32 Mutual Funds in your portfolio mean?

Part 1: It means a lot.

The 3 investment mistakes of my life