Key Points
Although diversification is typically beneficial, an excessive number of funds can complicate portfolio management and hinder the attainment of investment objectives..
Having too many mutual fund holdings can be a problem owing to many reasons, some of which include:..
Given the growing sophistication of passive index funds and their proven ability to replicate market returns at a reduced expense, it is wise to consider a passive strategy for your exposure to large and mid-cap investments..
Pursuing recent top-performing funds can give rise to a herd mentality, where investors blindly allocate capital to funds with impressive recent returns without taking into account their risk profiles or underlying investment approaches..
Although its natural to be attracted to mutual funds managed by an AMC with a track record of consistently strong performance, overreliance on a single AMC can introduce avoidable risks to your portfolio..
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