I am investing in nine funds – HDFC Equity, HDFC Top 200, Birla Sun Life Frontline Equity, Birla Sun Life Midcap, IDFC Premier Equity, Reliance Growth, Reliance Diversified Power Sector, DSP BlackRock Equity and Sundaram Select Midcap. Should I reduce my holdings to three funds – HDFC Equity, Birla Sun Life Frontline Equity and IDFC Premier Equity? Will this step deprive me of the expertise of four fund houses? What should I do?
Reducing your holdings will make your portfolio easier to manage. Investing in both HDFC Equity and HDFC Top 200 doesn’t make sense because both funds have great complementarity. The same will be the case with your other funds. Furthermore, sectoral funds like Reliance Diversified Power Sector are not worth having. Hence, 3 to 4 funds will be good enough for you, they will provide adequate diversification. Choose funds that are giving you exposure to all segments and capitalizations of the market.