Diversification is great for all components of all investment plans except for the ones which are as deeply researched as someone like Warren Buffett can do.
That's not tongue-in-cheek. He often writes about diversification isn't necessary if you know everything you should know about the company you're buying and he's right, the only problem being the knowing everything part.
For most of us, diversify. A lot. In your mutual funds, between different stocks, industries, countries, styles, etc.
Where you want to be careful in regard to your question is primarily in the cost of a fund. If a fund has a higher-than-average expense ratio compared to its peers, it probably also trades too often. Look at the "turnover ratio", which is the frequency with which the entire portfolio gets traded for something else.
You also want to be careful to not pick a slew of different funds which all hold the same stocks and/or bonds simply because you're not diversifying then, so why pay for it?
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