The "Collector" Syndrome: Why Owning 15 Mutual Funds Is Hurting Your Returns

 Are You a "Fund Collector"?

Open your investment app. How many mutual fund schemes do you currently own? If the answer is more than 8 or 10, you might be suffering from the "Collector Syndrome."

Many investors believe that buying more funds equals "Diversification." They think, "If one fund performs poorly, the other will save me." So they buy a Bluechip fund from AMC 'A', another Bluechip fund from AMC 'B', and a Flexi-Cap from AMC 'C'.

But in reality, this isn't diversification. It is "Diworsification."

The Problem of "Hidden Overlap"

When you buy 4 different Large Cap funds, you aren't diversifying. You are likely just buying shares of HDFC Bank, Reliance, and Infosys four times over.

Why is this bad?

  1. You Average Out Your Returns: If one fund manager makes a brilliant decision, its impact is diluted because you own 14 other funds that didn't make that move. You end up with "Average Market Returns" but pay "Active Fund Fees."

  2. No Risk Reduction: Since all these funds hold the same underlying stocks, when the market falls, all of them fall together. You have not reduced your risk; you have only increased your paperwork.

The Nightmare of Tracking

Imagine trying to review the performance of 18 different schemes.

  • Which one is underperforming?

  • Which one has changed its fund manager?

  • Which one has drifted from its original strategy?

It is impossible for a part-time investor to track this effectively. Eventually, you stop tracking altogether, and "dead" funds sit in your portfolio, dragging down your overall wealth.

The Magic Number: Less is More

A professionally managed portfolio rarely needs more than 5 to 7 funds to achieve perfect diversification.

A Simple "Core & Satellite" Structure:

  1. 1 Flexi-Cap Fund: For core equity growth.

  2. 1 Mid/Small Cap Fund: For aggressive alpha (optional).

  3. 1 Hybrid Fund: For stability.

  4. 1 ELSS: For tax saving (if needed).

That’s it. By concentrating your capital into fewer, high-conviction funds, you allow the power of compounding to work effectively. You also make it easier to rebalance your portfolio once a year.

Final Thought

Your portfolio should look like a well-tended garden, not a jungle. If you can't explain why a specific fund is in your portfolio in one sentence, it probably shouldn't be there.

Is Your Portfolio Cluttered?

If you have collected too many funds over the years and don't know which ones to keep and which ones to exit, let me help you "Declutter."

As an AMFI-Registered Distributor, I can run a Portfolio Overlap Report for you. We will:

  • Identify duplicate schemes.

  • Remove chronic underperformers.

  • Consolidate your money into a tight, high-performance portfolio.

👉 [Click Here to Request a Portfolio Cleanup]

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