Diversified investment companies are unit investment trusts or mutual funds that are structured to allow investment in a wide range of securities and various types of businesses. Mutual fund investors may be retail or institutional in nature. Given below is a list of best diversified funds in 2020. The ALFM Growth Fund was incorporated on November 26, 2007 and is classified under the equity fund segment of the mutual fund industry. Our weekly newsletter with finance tips and investment insights from our experts. Mutual funds are market-linked instruments. Ltd. ARN-84967, Our weekly newsletter with finance tips and investment insights The risk of investing in a mutual fund is lower compared with investing in just one or two stocks. When a Mutual Fund Is a Diversified Investment . Hence investors get to invest using multiple strategies in the market. They have to invest a minimum of 35% of total assets in large cap companies. A diversified fund has the flexibility to increase or decrease its exposure to large-caps, mid-caps, and small-cap investments depending on the fund manager’s perception of the market conditions and future market expectations. A hybrid fund invests across asset classes, namely equity and debt. On the debt side, there are long- … Diversification is one of the many advantages of investing in mutual funds and it can help an investor in two ways: instant diversification and portfolio diversification in multiple fund categories. A target-date fund offers complete investment diversification within one fund. As the name suggested, these funds have a diversified investment strategy. A diversified fund is an investment fund that is broadly diversified across multiple market sectors or geographic regions. However, a wise investor should be informed that, every investment carries its own risk which would need to be reduced at all costs. Each share represents an investor’s part ownership in the fund and the income it generates. What are the best diversified mutual funds. Similar to other categories of mutual funds, diversified funds also charge a fee for managing the investor’s money. Hence, mutual funds offer diversified funds that diversify across market capitalisation and industries. The fee is known as the expense ratio. But these companies can be from a single sector. They combine stocks of different companies to form one unit of an investment basket. Diversification is also done with multiple mutual funds in a portfolio. A mutual fund is an open-end professionally managed investment fund that pools money from many investors to purchase securities. Mutual funds offer natural diversification by giving investors access to many companies. If you are investing for a period of 10 years and you have moderate risk profile, you should invest mostly in multi cap mutual funds.If you wan to reduce the overall risk and diversify the portfolio, you may invest a small part in large cap schemes. Therefore, these diversified funds have a slightly higher risk when compared to pure large cap funds. Ideally, this reduces the risk inherent in any one investment, and increases the possibility of making a profit, or at least avoiding a loss. For investment in diversified mutual funds, the minimum recommended investment horizon is five years. 2/3/2016 1 Comment Have you ever heard of the saying, “Don’t put all of your eggs in one basket? 10 Reasons to Add a Mutual Fund to Your Portfolio, New to Investing? ), by country or region, or by business sector, such as healthcare or technology. Diversification in equity mutual funds comes with investing across sectors and market capitalisation. Mutual Funds. Mutual funds are of many types such as equity funds, debt fund, diversified funds, gold funds, ELSS, sector funds, among others. Mutual funds are a practical, cost-efficient way to build a diversified portfolio of stocks, bonds, or short-term investments. During adverse market conditions, diversified funds act as a cushion for portfolio returns. There are value funds which focus on value investing. They follow value investing as their investment strategy. A fund manager invests investors’ money in debt instruments based upon their credit ratings. While in falling markets, the large caps will act as a support to the mutual fund portfolio returns. Index mutual funds passively track an index. As the funds are structured to take advantage of the changing market dynamics, diversified funds have a higher turnover ratio. Hence, mutual funds offer diversified funds that diversify across market capitalisation and industries. 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