Securing Hannav Ledger...
Securing Hannav Ledger...
Glossary
Diversification reduces portfolio risk by spreading investments across assets, sectors, geographies, and instruments that do not move in lockstep.
Don't put all eggs in one basket — spread money across different investments so one failure does not wipe you out.
Unsystematic risk can be reduced through diversification; market-wide systematic risk remains. Correlation matters — diversifying among highly correlated assets adds less benefit. Mutual funds and ETFs provide instant diversification for small investors.
Instead of ₹10 lakh in one mid-cap stock, split across large-cap fund, debt fund, and gold ETF. A 30% fall in one stock becomes a manageable 3% portfolio impact if it is 10% of holdings.
Research suggests 15–25 stocks across sectors captures most diversification benefit; beyond that, marginal gains shrink.
Not if all funds hold similar large-cap stocks. Check underlying holdings overlap using factsheets or portfolio overlap tools.
Yes. Too many holdings dilute returns and increase tracking effort without meaningful risk reduction — especially with near-duplicate funds.