New Delhi, Aug. 18 -- For many mutual fund investors, adding another scheme to their portfolio feels like a simple way to spread risk. But owning a larger number of funds does not necessarily mean owning a more diversified portfolio. In fact, investors can hold several schemes while remaining heavily exposed to the same stocks, sectors or market-cap segments.

Experts say investors should look beyond the number of schemes and examine what each fund actually adds to the portfolio.

"The number of funds an investor holds tells us very little about how diversified they actually are," said Rhishabh Garg, CEO of FundsIndia.com. A mutual fund may already hold 40-60 stocks or more, he said, and two schemes with different names can still have sig...