I'm trying to undertand deversification in mutual funds, specially in contrast with having your own stocks.
Mutual funds and ETFs that track some index (S&P, DJIA...) are diversified by definition.
Still, if you invest in one of the above, you don't own the actual stocks, so you are actually investing all your money in just one asset (index fund/ ETF). If something happens to the mutual fund and it crashes, you lose everything.
Is the above correct?
Does it make sense to invest in different index funds that track the same index, as a security measure?