It’s common for investors to have more schemes in their mutual fund portfolios than required. Some investors may have even 2030 funds. The problem with too many funds is that they are difficult to manage, they pull down your portfolio returns and your portfolio becomes indexlike.

There are several reasons why investors end up with more funds than needed. The most prominent ones are chasing performance, being missold funds, overexcitement, lockin period in some funds, among others.

How many funds should you have? Sixseven funds are more than enough for adequate diversification. To reduce the number of funds in an investment portfolio, you can apply the following strategies:

1. Assign weights to your funds: Consider exiting funds that have less than 5% weight in your portfolio and in which you have stopped investing.
2. Exit the underperformers: Use Fund Report Card on the ET Money app for that.
3. Exit duplicate funds: If you have multiple funds of the same type, you can exit the less desirable ones based on performance, volatility, etc.
4. Review funds from the same fund house: Such funds can have portfolio overlap. Assess if they do. If yes, consider exiting some of them.
5. Exit sectoral and thematic funds: Such funds can be riskier as they focus on a particular theme or sector. Go for diversified funds. You can watch a detailed analysis of these at
   • Avoid these Mutual Fund Categories | ...  
6. Check the number of debt funds: Debt funds are needed for parking your emergency corpus or as the debt component to rebalance your portfolio. Just liquid (or arbitrage funds) and shortduration funds can do the job.
7. Prepare a model portfolio: How would you prepare a portfolio if you were starting now? Use this model portfolio to analyse your existing portfolio.
8. ET Money Portfolio Health Check: This tool on the ET Money app can highlight what’s wrong with your portfolio.

Chapters
00:00 Introduction
01:31 Why Do Investors Have Too Many Funds?
02:32 The Problem Of Plenty
05:20 How Many Funds Should You Have?
06:43 Strategies To Reduce Number Of Funds
17:21 Conclusion