Mutual funds.. Are they really diversified

I spent a lot of time with my financial planner last week trying to find or rebalance my portfolio.

We went down to the details of which stocks or themes my money was actually invested.

As we went into more and more details I found to my surprise (and his)  that a lot of the money even though it was in diversified funds was mostly in banks.

Most of the funds had around 20% of their money invested in banking sector and because the banking sector really jumped up by almost a 100% over the last 12 months all of these funds gave stellar returns

I was actually planning to buy some banking funds but having gone through the details we decided not to.

Banking  will definitely do well if the country has to progress and gdp growth needs to pick up.

But the question was on overexposure..  Hence the decision to avoid taking any further banking sector theme fund.

Over the last week one has seen that the bank nifty has come down by 2000 points.  The NBA of the sector (especially the public sector banks) have grown significantly.

So the learning I had and I want to share with my readers is not to only look at funds but also consolidate the shares owned by the funds to understand your financial exposure.

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