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I'm trying to understand the importance of investment companies when selecting a mutual fund to invest in.

I have read that you should always choose reputed investment companies, but there are quite a few of them that have a very good reputation, such as Vanguard, BlackRock or Exor (correct me if I'm wrong).

My question is: (hypothetically) if you find, say, three different mutual funds that are identical (asset allocation, expenses etc.) and you have decided to invest in one of them, but they are owned by three different reputed firms (such as the above ones), all of them present in your home country. What criteria would you use to choose one?

For instance, I'm aware that both Vanguard and BlackRock are USA firms, while Exor is european. Is this important? My concern is that european regulations are much harder than the USA ones, does this add some sort of risk to the european investor?

Does it make sense to diversify your portfolio in terms of financial firms, to minimize the risk of that firm going to bankrupt or getting expropriated?

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Does it make sense to diversify your portfolio in terms of financial firms, to minimize the risk of that firm going to bankrupt or getting expropriated?

In general, no. Most locations where mutual funds are run, have regulations guaranteeing that the assets are not part of the balance sheet of the mutual fund company and that if the mutual fund company fails, the assets are distributed back to investors.

However, if there's a very high likelihood that some mutual fund company is going bankrupt, it might make sense to avoid investing into the funds of the company because of the hassle of extra taxation when distributing the assets back to investors, and because of the fact that it's very hard to reinvest the money at exactly the same hour the assets have been sold. So you might miss some return.

Pick a reputable mutual fund company, focus on the fees and that's it! Diversifying based on sectors, markets and individual companies makes sense, but diversifying to three otherwise identical mutual funds does not.

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