New Delhi, Jan. 6 -- Diversification in mutual funds is usually discussed in terms of asset classes (equity, debt, gold, etc) or market capitalisation. What's often ignored is diversification across investment styles - growth, value, and factor investing, to name a few.

Growth investing tends to do well when the economy is expanding and confidence is high. Fund managers who employ this style back companies that reinvest aggressively to expand, and tend to grow earnings faster than their peers. These stocks often trade at premium valuations because investors are willing to pay more today for the promise of faster earnings growth in future. However, this style of investing is not without its challenges. When growth expectations falter even...