Diversification: How much is too much?6 min read . Updated: 02 Dec 2015, 02:41 AM IST
Relative performance is important. But fund size and conviction in ideas also dictate the number of stocks
How much is too much? This is the diversification question that often comes up. Portfolio theory states 25-30 stocks are needed for efficient diversification and the best risk-return trade off. On the other hand, veteran long-term investor, Warren Buffett says that diversification is for those who don’t know what they are doing (investing in).
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