We all make mistakes, especially when it comes to managing our money. Take mutual fund investments. From buying them by the dozen to buying none at all, even if we need them—a cursory glance at an average investor’s portfolios would reveal many such holes. So, we asked some of the country’s leading financial advisers about the major shortcomings they see in fresh clients’ mutual fund portfolios. Here are their stories.
No asset allocation
Thirteen of the 18 advisers we surveyed say this is a common problem. Many times, investors buy funds based on past returns only. “This results in multiple funds of the same type to be in a portfolio. For example, investors buy multiple mid- and small-cap funds when they are doing well, or multiple government securities funds when interest rates are falling,” says Vishal Dhawan, founder and chief executive officer of Mumbai-based Plan Ahead Wealth Advisors.