It is highly desirable that to add at least one more fund to the portfolio to ensure diversification, suggests Ashutosh Gupta
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I have an SIP of Rs 20,000 in a single equity fund. Should I diversify it across fund houses or continue with the same? What are the pros and cons?
It is highly desirable to diversify and add at least one more fund of a different fund house to your portfolio. If you remain invested in a single fund and if something goes wrong with his fund, all your investments will be tied to the fortunes of that single fund. So from the principles of diversification, you should add at least one more fund to your portfolio.
There is no downside to diversification as long as one does not go overboard with it. Of course, in hindsight, if your original fund, where you are making investments, turns out to be a far superior performer, at a later stage, you might wonder whether it was the right decision to diversify and add the other fund. But I don't think it is reasonable to think like that because nobody knows what will happen. So I would suggest you should go ahead and add one more fund to diversify.