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Why is too much diversification considered a negative thing when dealing in a mutual fund?

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When talking about diversification in a stock portfolio, we're referring to the attempt by the investor to reduce exposure to risk by investing in various companies across different sectors, industries or even countries. Tracking a mutual fund is difficult and evaluating is nearly impossible. Plus, the risk isn't really reduced when you own a lot f mutual funds due to diversification. The more mutual funds you hold, the more costly it is because of the annual fees.


User Eugene Biryukov
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