How Many Funds Are Recommended by The Best Mutual Fund Advisor in Kolkata?

When new investors start their mutual fund journey, one of the most common questions they ask is:

“How many mutual funds should I invest in to build a diversified portfolio?”

It's a great question—and the answer might surprise you. Most people believe that the more funds they have, the more diversified their portfolio is. But in reality, too many funds can lead to confusion, duplication, and poor tracking.

Whether you're a first-time investor or someone looking to tidy up your current investments, this blog will help you understand how many funds are enough, and how the best mutual fund advisor in Kolkata like ACE Financial Services can help you structure your portfolio.

Why is Diversification Important?

“Don’t put all your eggs in one basket.”

This applies perfectly to investing. Diversification helps reduce risk by spreading your money across different types of investments. But many people misunderstand this concept.

Buying 10–15 mutual funds doesn't guarantee diversification. In fact, it may just create a messy portfolio with overlapping investments. That means you're putting your money into similar stocks across different funds without any added benefit.

Instead, a few good-quality funds across different categories will do the job better. That’s why even the best mutual fund company in Kolkata recommends keeping your portfolio lean and clean.

So, How Many Mutual Funds Are Just Right?

Here’s a simple rule: 3 to 4 funds are enough for most investors to build a well-diversified portfolio.

Why only four? Because most mutual funds are already diversified within themselves. They invest across sectors, industries, and companies. Having more than 4 funds often leads to repetition, especially if they belong to the same fund category.

Here’s what a clean and diversified 4-fund portfolio might look like:

What Happens If You Choose Too Many Funds?

Overlapping investments: Different funds might end up investing in the same stocks, offering no additional diversification.

Difficult to track: Monitoring 10–12 funds monthly can be stressful and time-consuming.

Lower returns: More funds mean diluted returns and possibly higher expenses.

Conclusion:

A well-diversified mutual fund portfolio doesn’t have to be big, it just needs to be smart. With just 3–4 carefully chosen funds across different categories, you can reduce risk and improve your chances of long-term returns.

Instead of trying to do it all alone, consider talking to a professional. With their help, you’ll avoid common mistakes and build a goal-based portfolio tailored to your financial needs. Remember, mutual fund investing is not about collecting schemes, it’s about creating potential corpus through the right ones. Keep it simple, keep it diversified, and keep it aligned with your goals.

Disclaimer: Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully before investing. This article is meant for educational purposes and does not recommend any specific mutual fund scheme.