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Diversify Across AMCs

Investing in schemes of only one fund house can put you at the risk of concentration of investments

I am a regular mutual fund investor for the past three years. I want to know if there is any harm in having funds of different categories from the same fund house. For example HDFC Equity, HDFC Mid-Cap Opportunities, HDFC Prudence and HDFC Top 200 are excellent funds in their respective categories. Should one diversify across fund houses?
- Nirav Vyas

There is nothing wrong per se but there is the risk of concentration of investments in one asset management company (AMC). What if the key fund manager exits and all the schemes are hit? What if there is a mass exodus of the fund management team? What if there are some select stocks that are universal across the schemes of the fund house and they all perform badly? What if there is an inherent fund management style across all schemes that may backfire? What if there is a strong duplication of portfolios? Moreover, with the variety available in the fund management industry, it makes sense to diversify across AMCs.

Be prudent and diversify across categories and fund houses.

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