Excessively diversified portfolio will never give extraordinary returns

Diversifying too much may reduce risk, but it also hurts returns

The sharp market correction over the past few months may have created a dent in your portfolio of stocks and mutual funds. Some investors’ portfolios would surely have corrected more than others. And there could be many reasons for this. One important reason could be concentration. That is, holding stocks and funds concentrated on a particular sector that has shown weakness during the bear phase. However, while such concentrated portfolios increase risks, most investment experts also believe that excessive diversification also does not help in wealth creation in the long run. “Excessively diversified portfolio will never give extraordinary returns,” says