Fund portfolio should use diversification investment to disperse risk

In the whole portfolio, how many funds are better?

Although there is no fixed rule, it should be emphasized that the degree of diversification of the portfolio is far more important than the number of funds. If the funds are all growth type or concentrated in a certain industry, even if the number of funds is more, it is difficult to achieve the purpose of risk diversification. On the contrary, an index fund covering the whole stock market may be more able to spread the risk than a combination of multiple funds.

After the investment portfolio is determined, we should regularly observe the performance of each fund in the portfolio, and compare its risk and return with similar funds. If in a certain period of time, such as three years, the performance of a fund has been lagging behind that of other similar funds, it should be considered to replace this fund.

In the current market where the overall market value is overvalued and the systemic risk is still significant, we should learn to "steer by the wind" according to different time points, and choose to buy different types of funds, so as to drive a good boat.