25+ mutual funds in under three years: why this Kolaveri?

Recently reviewed a colleague’s #MutualFund #Portfolio.
Portfolio age: < 3 years, Number of funds: 25+!
I asked: “Why this Kolaveri?”

Familiar Answer:
#Diversification toh hona chahiye (Diversification is Must)
So added one fund from every possible category - Large Cap, Mid Cap, Small Cap, Flexi Cap, Sectoral. And in between, read how International exposure is a must-have, so she added the best performing fund in that category too!
And she #Reviews the performance every 6 months: Stop the SIP if the fund is not in the “Top 3” and start a new SIP in the new “Top performer.”

End result? A mutual fund museum of past winners!

Where does this come from?
Thanks to the ever-amplifying noise in #SocialMedia by #Finfluencers:
“Best fund to buy NOW.”
“Top 5 funds for 2026.”
We’ve been conditioned to believe: There is always a “perfect fund” out there
And if you don’t own it…You’re missing out!

Over-diversification is of no help. If individual category allocations become tiny (<10%), their impact on overall portfolio value is negligible!

What I suggested to her was a #boring alternative!
#IndexFunds! Nifty 50! Nifty Next 50!
(Most active funds have failed to beat the index consistently)
In case of #FOMO, add One Flexi Cap, if you really want!

This Boring approach has multiple benefits -
- No need to follow someone just to find the next opportunity, simply keep the noise out
- No need to keep a track of fund performance, fund manager investment styles, etc
- Lower cost, keeps the portfolio clean, with minimal overlap

The market doesn’t reward: Who finds the next “Top fund.”
It rewards: Who stays invested in a sensible strategy
Remember, Equity investing is a test match, not a T20 game!