Too Many Mutual Funds?

The consensus is that a well-balanced portfolio with approximately 20 to 30 stocks diversifies away the maximum amount of unsystematic risk. Because a single mutual fund often contains five times that number of stocks, does that mean that one fund is enough?

Vote "Yes"
Proponents of the "Yes" theory suggest that equity investors buy a broad index fund, such as the Vanguard Total Stock Market Index Fund, and let time do its work. Even investors seeking exposure to both stocks and bonds can get their desired asset allocation through the purchase of a single balanced fund. (To read more on allocating your assets, see 5 Things To Know About Asset Allocation.)

Vote "No"
On the equity side, others would note that a single fund would fail to provide adequate exposure to international investments. The argument here is that a global fund provides a little bit of everything, but not enough of anything. From there, the argument goes that a large-cap domestic fund and a small-cap domestic fund cover the bases on the home front. An international fund, perhaps two at most, cover the international front. Two-fund proponents select one fund from the developed foreign markets, like Europe, and the second in emerging markets such as the Pacific Rim or Latin America. If fixed-income exposure is desired, a domestic bond fund is added to the mix, bringing the count to six funds.

Read more: https://www.investopedia.com/articles/mutualfund/07/too_many_funds.asp