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Think more mutual funds mean better diversification? Here’s why your portfolio may still be concentrated
Mint 10 hrs ago·18 Aug 2026, 10:49 am
Many investors believe that buying more mutual funds guarantees a safer, more diversified portfolio. However, this is a common misconception. A portfolio can actually become more concentrated even with multiple funds if those funds hold the same underlying stocks, sectors, or market caps. This duplication means your money is not spread across truly different companies, leaving you exposed to the same risks repeatedly.
For retail investors, this matters because it reduces the risk-reduction benefits of diversification. You may be paying higher fees for funds that are essentially buying the same assets. To fix this, you should review your holdings and identify overlaps. This helps you understand exactly where your money is invested and ensures you are building a truly balanced portfolio.
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