New Delhi, Dec. 3 -- A friend of mine recently shared something that made me smile-and think. He was prescribed magnesium for persistent cramps but chose to take a multivitamin he already had at home.

"It has magnesium," he said.

It did-just 4% of the daily requirement. A week later, nothing changed.

A familiar mistake investors make with multi-asset funds: assuming that presence equals protection. But like the multivitamin pill with a trace of magnesium, the actual impact on the portfolio might be too small to matter. Let's break this down.

The illusion of diversification

Consider a multi-asset fund that holds equity, debt, and gold with allocations of 65%, 25%, and 10%, respectively. On paper, this seems well-diversified. You inves...