It is important to diversify your investments across fund houses. But it also depends on the scale of your money. If you have just started investing and have a small corpus, or have a SIP of Rs 2,000 a month, maybe it's complex to have more funds - having just one aggressive hybrid fund provides you with convenience.
But the moment your accumulation gets bigger, it is important to spread your investments across funds of more than one fund house. Diversifying across more than one fund house is important and it should not be just across multiple mutual fund schemes of the same fund house.
Several funds of a fund house will tend to have the same fund management and research teams. So, if their bets go wrong, it may potentially impact the performance of all their funds. Besides, there could be other factors such as the exit of a key fund manager which may impact several funds of that fund house.
Also, great fund managers do go in and out of favour. Great fund managers who have been doing well for many years, sometimes end up struggling for three-four years. And that's the case with most fund managers. The best fund managers go out of favour and the not-so-well-known fund managers come to the forefront. So, things change. There is a churn.
So, the moment your accumulation becomes meaningful and your real-life goals are dependent on that, it's better to diversify across funds of different fund houses. Because you cannot bank on the skill, brilliance and luck of just one. And exactly for this reason, you should have your money entrusted to more than one fund manager of a different fund house.
For moving your money from one fund house to another, there is no other way than to redeem your old investment and make a fresh investment in the fund of your choice. However, you do not need to make this investment in a staggered manner. The money can be moved in a lump sum, and not the SIP route. The entire idea of staggering your investment in equity is to average the cost of purchase which you might have already done while making the investment. So now, it can be moved as a lump sum.
However, be mindful of the capital gains tax and the exit load. If you sell your investment in equity funds after a year, the realised gains are taxed at 10 per cent. But the gains up to Rs 1 lakh are exempt in a financial year. There is no other way to minimise the tax impact than using this Rs 1 lakh exemption window and splitting the redemptions in a way that the long-term capital gains in a financial year do not exceed Rs 1 lakh.
Suggested read: Diversification: How to get it right