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How many funds should you buy?

A fund's performance can change drastically from year to year. You can protect yourself from this by holding a basket of funds. But how big should your basket be?

How many funds should you buy?

The best performing equity multi-cap fund in 2016 returned 15.21% while the worst returned -6.67%. And this is only fluctuation within a specific category. Different categories of funds do better than others at different times. So picking a single fund or too small a selection of funds exposes you to the risk of being simply wrong. With a basket of funds, you still run the risk, but to a much lower degree.

But how much should you diversify? The average equity multi-cap fund holds 48 stocks. Buying more funds will bring more and more stocks into your portfolio and sometimes more of the same ones. After a point, your portfolio behaves like the market as a whole - giving up its ability to do better or worse.

So where do you draw the line? Join us in our latest Money Hangout to know.

How many funds should you hold?
Date: Saturday, Mar 04, 2017
Time: 12:30 PM - 1:00 PM

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