Скачать или смотреть Important Thing To Know While Investing In Mutual Funds !

All of us have that 1 friend who is super smart with stock market or crypto investing.

We might have also offered to give all our money to that person asking them to handle it.

Similarly, when a mutual fund company performs really well we might be tempted to put all our money in that company's various funds.

Here's why that might not be a good idea:

👉🏻 Concentration risk: There is usually a lot of overlap between different mutual funds of the same company. For eg, there is an 83% overlap between HDFC Flexi cap fund and HDFC Top 100 fund. So much overlap is not good for diversification

👉🏻 Similar fund view: More often than not, the same fund manager will be responsible for multiple funds. He / she might impose the same investment philosophy on the future outlook of various industries on multiple funds. So if 1 fund underperforms all of them will underperform. For eg, HDFC mutual fund all have an inclination towards PSU stocks

This is also true for debts where the views on interest rate movement and the company's debt repayment capabilities can have a cascading effect on all the debt funds within the company.

➡️ TLDR: Along with asset diversification also do fund house diversification to take the extra precaution.
.
.
.
.
.
.
.
.
.
.
.
.
#financewithsharan #investingtips #investingforbeginners #financetips #mutualfunds #personalfinance