Should You Entrust All Your Money To A Single AMC?

If you are a market participant, you have probably heard the quote 'don't put all your eggs in one basket', which suggests diversification. Investors often focus on diversifying across categories like large-cap, mid-cap and small-cap, but they may unintentionally overlook diversification across different AMCs. The question arises: is AMC-wise diversification really necessary? Rakesh Deshmukh takes a closer look at this scenario

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Are you the type of person who likes to go to a particular market and buy products for which they are famous, or do you normally go to a supermarket, mall or chain store where you can find everything under one roof? The latter option not only saves time but also the effort of going to different places. Obviously, each has its own pros and cons, which we eventually realise after some time. Similarly, in the world of finance, there are types of investors who prefer to buy stocks or mutual funds belonging to the same group or AMC, while other investors buy from different groups according to trends or suggestions.

A key question you might have while reading this article is whether having multiple funds from the same AMC - even if they are in different categories like large-cap, mid-cap and small-cap - increases your risk unnecessarily. Should you think about spreading your investments across different AMCs instead? Many investors prefer the simplicity of managing all their investments under one AMC. They trust the consistency and ease of overseeing their funds in a single place. On the other hand, some opt for diversification across various AMCS to spread risk and access different investment strategies. They appreciate the potential for higher returns and the flexibility of choice.