I have found this advice at various places but have not understood it. By diversification we reduce risk by not putting all our eggs in same basket. This is a very strong argument in favor of diversification.
On the other hand overdiversification is said to make investment complicated since the investor will have to track a lot of funds for their performances. Also some say that this way the investor will have to pay a larger amount of management fees. These are true but still I find the argument for diversification compelling.
If I want to invest Rs4000 in large cap fund, should I choose one good fund or two/three funds? What would you do in such a case? Can you share your views about this issue?
On the other hand overdiversification is said to make investment complicated since the investor will have to track a lot of funds for their performances. Also some say that this way the investor will have to pay a larger amount of management fees. These are true but still I find the argument for diversification compelling.
If I want to invest Rs4000 in large cap fund, should I choose one good fund or two/three funds? What would you do in such a case? Can you share your views about this issue?