Category: Business, Education, Technology

A common and costly mistake among direct investors is the confusion between owning multiple funds and owning a diversified portfolio. It is entirely possible, and indeed quite common, to own five different mutual funds while having essentially no diversification at all. If all five funds are large-cap equity funds, your portfolio is essentially a single bet on large-cap Indian stocks. If they are all growth-oriented funds, you are exposed to the same style risk. If they all have significant overlap in their top holdings, you may be unknowingly concentrated in a handful of companies. This is not a portfolio; it is a collection, and a collection without intentional design is a recipe for unnecessary risk and volatile returns.