A recent analysis by Stable Investor highlights the overlap between various flexicap funds. This chart includes funds like Parag Parikh, JM Flexi, HDFC Flexi, and Quant Flexi. It helps investors see how much one fund overlaps with another. For example, the overlap between HDFC Flexicap and Bandhan Flexicap is 39%, while Canara Robeco Flexicap and Edelweiss Flexicap overlap by 58%.
The Importance of Diversification
Investors often hold multiple funds in their portfolios for diversification. However, if there is significant overlap between these funds, the diversification benefit is reduced.
Interestingly, the chart reveals that some funds have very little overlap with others. Funds like Parag Parikh, Quant Flexicap, Motilal Oswal, and NJ Flexicap stand out because of their minimal overlap with other funds.
Funds like LIC Mutual Fund, has only a 1% overlap with others. Secondly, funds with minimal overlap, like Parag Parikh and Quant Flexicap, could either be top performers or underperformers due to their unique stock selections.
From this analysis, it appears that funds with unique stock selections might either be doing very well or very poorly. For instance, Parag Parikh and Quant Flexicap are known for their good performance. However, the performance of NJ Flexicap and Motilal Oswal is less certain. This uniqueness in stock selection could be a reason for their distinct performance.
Enthusiasts may check if funds with minimal overlap are indeed top performers or if they fall into the lower performance band. Most other funds might have similar performances due to their significant overlap.
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