The article's aim is good. But, I don't think they have done any study before suggesting these magic numbers (15 stocks & 6 MFs). The actual numbers may be half of these (6 to 8 stocks & 3 MFs). If carefully selected, this is enough to achieve the required diversification. Anything above this doesn't reduce any more risk.
Re: Magical numbers for diversification
by Zeng on Jun 25, 2010 02:57 PM
Even though I am not an expert, I guess your suggestion of 3 mutual funds is better, or may be 4. My choice is couple of large cap diverified funds, one mid cap fund and one contra / sector specific fund, if you feel strongly about it. 3 funds means you have more than 100 stocks in portfolio, which is good.
On number of stocks, 6 to 8 might be less, especially if you go for high beta stocks, mid cap / small caps etc. My ideal choice is 10-15 stocks with none of them having more than 15% of your total investment.
Re: RNRL MUTUAL FUND
by N Anantharaman on Jun 22, 2010 12:57 PM
If you'd invested via SIP rather than made a bulk buy, you would've had your capital protected and earned a neat margin. Take it as a learning rather than a loss!
Re: Re: Re: RNRL MUTUAL FUND
by Bitter Truth on Jun 23, 2010 04:32 PM
I agree with you, i think it is delivering decent returns.. i also invest in these 2 funds since 2007 dec and continuing vis SIP route. For that sake canara robeco and DSBR balanced also doing good.