Smart Investing Made Simple: Why Diversification in Mutual Funds Matters

What Does Diversification Mean in Mutual Funds?Diversification simply means spreading your investments across different asset classes, sectors, and geographies so that your risk is balanced.For example, instead of investing all your money in one equity mutual fund that focuses only on technology companies, you might invest in a mix of
An equity mutual fund (stocks)
A debt mutual fund (bonds, government securities)
A hybrid or balanced fund (mix of equity and debt)
Maybe even an international fund (exposure to global markets)
This way, if one sector or asset class performs poorly, the other investments can balance out the losses.