A Simple Option
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Personally, I would never place all my investments with one fund or even several funds with just one provider. I like to spread the risk - some index funds, some professionally managed investment trusts. I like exposure to different sectors of the economy and prefer global rather than confining my investments to the UK-listed investments .
However, some would argue it is possible to be over-diversified. Legendary investor Warren Buffett suggests that if you diversify too much you might not lose much but equally, you won’t gain much either. His approach is to concentrate on companies he knows inside out and select a few well researched options out of which there is the expectation of some big ‘winners’.
Buffett is exceptionally experienced, skilled and disciplined in his approach to investing - many try to emulate his success but no one has come close. A return of just under 20% cagr over the past half century is a phenomenal achievement.
For the average small investor therefore, I would think the better strategy would be to focus on a good mix of assets which should closely match your temperament and appetite for risk. The diversified and balanced portfolio will always miss out on the very best possible returns but equally will avoid the terrible car crash whist delivering what should hopefully be acceptable and a 'good enough' return.
Feel free to comment below on how you go about maintaining a diverse portfolio.