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.