Why Diversification Is the True Strength of Your Portfolio
When investors look at their portfolio, a common question arises:
“This scheme is doing very well, but why are the other ones not performing the same way?”
It’s a fair question. But here’s the truth: a strong portfolio is not built for every scheme to perform equally at the same time. It is built for balance, stability, and long-term wealth creation.
The Cricket Team Analogy
Think of your portfolio like a cricket team.
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You don’t expect every player to score a century in every match.
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The opener may take big risks to score quickly, while the middle-order batsman plays carefully to build stability.
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The bowler doesn’t score runs at all—but is absolutely crucial for winning matches.
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The wicketkeeper may not hit big shots, but his consistency and safe hands are essential for the team’s success.
And remember—even the best players fail sometimes. Virat Kohli might get out for zero in a match or go through a rough patch, but that doesn’t mean he’s not one of the greatest players. Similarly, if one scheme underperforms in a certain period, it doesn’t mean it has lost its value.
A cricket team wins because of collective performance, not because of one star. In the same way, your portfolio succeeds when all schemes work together in their own roles.
Why Every Scheme Doesn’t Perform the Same
Each mutual fund or investment scheme follows a different strategy. Its performance depends on many factors, such as:
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Market conditions – Different sectors shine at different times.
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Sector allocation – IT may perform well during a technology boom, while banking may shine when interest rates are favorable.
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Stock allocation – A few chosen stocks can significantly impact performance.
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Risk level – Some funds take higher risks for higher returns, while others focus on steady, calculated growth.
This is why one scheme may deliver extraordinary returns in a given year while others appear average. The high-performing scheme may simply be positioned in the right sector at the right time—or it may be taking greater risks. The others are not “bad performers”; they are playing their roles to provide stability and balance.
The Real Purpose of Diversification
Diversification is like insurance for your investments.
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If you only put money into the top-performing scheme, you might enjoy big gains today—but also face high risks tomorrow if conditions change.
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By spreading your investments across different schemes, sectors, and strategies, you protect yourself from sharp downturns.
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Some schemes will give growth, others will give stability, and some will act as a cushion during tough market phases.
This mix is what allows your wealth to grow steadily and sustainably over time.
The Big Picture
When you evaluate your investments, don’t judge them scheme by scheme. Instead, look at your portfolio as a whole.
At any point in time, a few schemes will lead, while others will quietly protect your capital. Together, they ensure that your portfolio is well-balanced, resilient, and aligned with your long-term goals.
Just like a cricket team doesn’t depend on one player to win every match, your portfolio doesn’t rely on one scheme. Diversification is the real strength behind consistent wealth creation.
Akshay Tiwari
Next Portfolio
🌐 www.nextportfolioindia.com
AMFI Registered Mutual Fund Distributor
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