QUOTE(Junrave @ May 26 2015, 08:05 AM)
Could anyone tell me whether investing in 1 fund with certain amount or 2 different fund with split amount, which one is preferable and advisable? why?
For example :
RM2000 in Kenanga Growth Fund as initial investment
or
RM1000 in Kenanga Growth Fund and RM1000 in eastspring small cap fund.
As what I understand, diversify in different fund helps to spread the risk in case 1 of the fund is facing losses.
Thanks.
Diversification is important to minimize specific risk such as country, industry and regional risk. So adding another fund of different investment geography is recommended such as Asia ex-Japan as stated by some of the members.
Nevertheless, I think what you need to do is retrace back the objective of your investment. If you want high returns but don't mind swallowing the short-term risk, you can go for both equities. But if you don't mind to settle for lower returns as long as you don't face excessive lost (especially in short-term), adding a bond fund into your investment is not such a bad idea. Even better is being more specific with your objective like obtaining 8% return per year for example, then use past performance of funds you have to project the potential return of your portfolio.
In my opinion also, once you build up more capital, try to diversify even more and add bond funds from 10-40% of your portfolio base on your risk tolerance. Having just 2 funds in your portfolio is not enough to diversify.