Can I invest in large, mid, small cap schemes of the same fund house?

I am investing in equity schemes through SIPs. I have a general question. Is it good to invest in large, mid and small cap funds of the same fund house? Are there any risks associated with this approach?
–Jestine Augusthy

Mutual fund experts typically ask investors to spread their investments across fund houses. This is done to avoid concentration risk. When you are investing in a single mutual fund house, any problem with the fund house will have a huge impact on your entire portfolio. If you diversify your portfolio across fund houses, the impact will be lower.

We always ask investors to choose mutual funds based on their goals, investment horizon and risk profile. For example, if you have conservative risk profile and you are investing for a long term, you should invest in large cap funds. Similarly if you have a moderate risk profile, you should invest in a flexi cap scheme. We don’t recommend risky mid cap, small cap, sector/thematic schemes to regular investors because we think they would struggle to continue with their investments in tough market conditions. Also, investing small amounts in too many schemes will not help you diversify or maximise your returns. That is why we normally ask new investors to opt for flexi cap mutual funds as they invest across sectors and market capitalisations.


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