Hi,
I understand from your article that overlap of MFs will have to be taken care . Generally many of the MFs have overlaps. Up to what percentage of overlap ( max ) is ideal for investment. For example- while checking, I found that SBI bluechip fund (G) and ICICI pru blue chip fund (G) have 39% portfolio overlap. Is this within acceptable limit of investment ?
2 Answers
Hi,
Though overlap is a good analytical tool, its not the deciding factor when shortlisting a fund.
There is no rule of thumb, but let's say if overlap is as high as 60%, there is no point in adding multiple funds to ones portfolio.
Also, note that the funds' portfolios change over a period of time, but we cant keep churning our MF portfolio based on Overlap indicator.
We can pick 2 to 4 good funds based on financial goals and just keep track of them. Hope you agree with my viewpoint???
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