MYTH-6. DIVERSIFICATION OF PORTFOLIO, AS MUCH AS POSSIBLE, IS GOOD
·
No,
this is not true.
·
Over-diversification
can often lead to spreading of one’s portfolio too thin.
·
Such
a strategy could lead to having such assets which may
not perform well, or even perform poorly.
· This may result in the good performance of some
of the other assets being neutralised too.
·
So excessive diversification can
actually harm one’s portfolio rather than helping it.