Success Mantra: A portfolio of 18 to 25 quality stocks bring optimum diversification Holding a portfolio of 18-25 quality stocks brings in the optimum diversification and reduces risk substantially. In the global context, ‘Equity’ as an asset class has the distinction of outperforming other asset classes such as Fixed Income, Gold and Real Estate over the long term (greater than 10 years) on a risk-adjusted basis. This outperformance stands out especially when we consider inflation and rolling returns across time periods. But, equity is a high-risk, and high-return asset class and a large number of stocks do not beat risk-free sovereign securities even over longer periods of time. Hence, holding a portfolio of 18-25 quality stocks brings in the optimum diversification and reduces the risk substantially.