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Should we invest in multiple funds managed by the same fund manager?

Ashutosh Gupta explains the importance of diversification across fund houses

Is it fine to invest in multiple funds managed by the same fund manager in different categories?
-Maulin Biharilal

The principles of diversification suggest that one should be diversified at the AMC level as well. This holds even if we are discussing two very different funds in their investment mandate, maintaining a different underlying portfolio. Because despite a difference in the investment mandate, they have a common underlying research team. So there would be certain commonalities that would reflect in their portfolio, which could relate to the research team's view on the state of the markets, their outlook on different sectors, approach to stock selection, investment style, and so on. So these are all the common threads that would run through the funds of a particular AMC. And these commonalities would be even more pronounced if the same fund manager manages them.

So it would be wise not to commit more than 30-40 per cent of the money to the funds of the same fund house. And beyond that, look to diversify across the AMC level.

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