New Delhi, June 9 -- Many investors end up with cluttered portfolios containing 20 to 30 different mutual fund schemes. However, collecting a large number of funds does not guarantee proper diversification, and spreading investments too thin has its own pitfalls.

Amol Joshi, founder of Plan Rupee Investment Services, pointed out that true diversification isn't achieved by simply adding more funds to your basket. He explained that when investors buy multiple schemes within the same category, they often end up duplicating their exposure because those funds hold very similar underlying stocks. Instead of collecting such overlapping investments, Joshi recommends focusing on a small number of complementary schemes that balance each other out....