You can take any good thing to excess, even moderation.

If that maxim is true and who would dispute it it also applies to mutual-fund diversification.

Without question, the spreading out of risk that funds provide by holding a diversified pool of securities is a good thing. It’s the basic, prudent principle that has attracted more than 80 million U.S. investors to funds, and holds a strong promise of keeping them there no matter how the market winds blow.

The problem is that in any individual investment plan, the benefits of diversification can reach the point of diminishing returns faster than you may realize.

Just ask any investor who has accumulated some standard taxable fund holdings, as well as tax-deferred retirement savings, over the years an individual retirement account, a 401(k), maybe a Keogh plan from a moonlighting job, and custodial accounts for the kids.

Before you know it, you’re the surprised owner of 15, 20 or 25 different funds, and the golden principle of fund diversification isn’t working in your favor any more.

If you put all the pieces together, your investment resembles a lumpy index fund, except that it lacks the cost savings that come with funds set up to parallel the course of a market index.

Like a gambler who bets every number on the roulette wheel, you have left yourself no way to beat the house.

“You don’t want to overdiversify and build yourself an expensive index fund,” says Meredith Brooks, a managing director at the investment consulting and money-management firm of Frank Russell Co. in Tacoma, Wash.

Avoiding this pitfall may take some doing. Your employer-sponsored 401(k) plan, for instance, may offer only a limited selection of funds, including none of the ones you picked for your personal, taxable account. Your IRA, started at a different time, resides in still another locale.

When your in-laws gave a gift to start the children’s custodial accounts for college, they picked a fund group you’d never even looked at. But family politics being what they are, you wouldn’t dream of moving that money anywhere.

You’re powerless over all these circumstances, or most of them anyway. You can still take steps, though, to limit the number of funds you buy where you do have discretion.

Consider consolidating old and new 401(k) plans after you change jobs. Move all your IRAs under one (solid) roof. Resist the impulse in your taxable account to “collect funds like postage stamps,” in the words of David Wright, an analyst at the Dow Theory Forecasts advisory service in Hammond, Ind.

Remember that while many funds appear alluring in the glow of a bull market, sooner or later you may have to look at the ones you take home in a less flattering light.

“Most of the benefits of diversification can be achieved with only a handful of funds,” Wright said. “Stick with five to nine funds spread around domestic and international stocks and bonds.”

He reached those conclusions after studying how adding and subtracting various funds from a theoretical “portfolio” affected the variability of the portfolio’s returns.

Wright used a gauge known as standard deviation, which, loosely defined, measures how much a fund’s return varies most of the time. (The higher the standard deviation, the more volatile an investment.)

With one aggressive stock fund, the Janus Enterprise Fund, he found a standard deviation of 48 percent. Adding another hot fund from the same management firm, Janus Mercury, lowered the number only to 43 percent, and a third, Janus Olympus, reduced it not at all.

Wright assembled a package of five more conservative stock funds one each devoted to large-cap, mid-cap and small-cap U.S. stocks, international stocks and intermediate-term bonds that had a combined standard deviation of about 15 percent. After that, he had trouble reducing the number much further by adding more funds.

Putting a high-yield bond fund into the mixture got it down to 14 percent. A municipal bond fund, 12. Then he added another large-stock fund, and it climbed back to 13. “More is not always better,” he said.

Thus we learn that fund diversification boasts a virtue you find in many useful commodities: A little goes a long way.

Chet Currier is a columnist for Bloomberg News.

Fund Confab Pays Different Kind of Dividends

If you can possibly arrange it, make a point some time in your life to attend a big national conference on fund investing.

You could go to learn more about funds and money-management strategies, which by itself might justify the $1,500 or so you’d spend on hotel and travel costs.

You could go for celebrity sightings of the stars of financial TV. “Hey, wasn’t that Mario Gabelli?” “I just saw Ralph Wanger in the lobby.”

But whatever your mission, don’t miss the real payoff the wacky assortment of gifts, gadgets and gimcracks they always hand out in the exhibit hall.

At a recent Morningstar Inc. conference in Chicago, 109 fund companies and related businesses set up booths in seven aisles of display space. They filled a whole floor of the Hyatt Regency Hotel, just down the escalator from where Jack Bogle, founder of the Vanguard Group, signed autographs and a panel of technology fund managers earnestly talked build-outs, bandwidth and the B2B space.

Ostensibly, the people posted in these stalls were there to hand out promotional literature about the funds that their employers manage. But as any veteran of these events could tell you, their real purpose was to dispense souvenirs.

Yo-yos, T-shirts, water bottles, key chains, stress balls, mouse pads, sun visors, travel mugs, refrigerator magnets, golf tees, calculators, pencils and pens, all of them emblazoned with the name of a fund or investment-information firm. As you pass from booth to booth, you drop your booty into a tote bag, also commercially inscribed.

To amass a collection like this at Disneyland or a ballpark souvenir stand, you’d spend $200 or $300 for sure. But at any fund conference worth the name, it’s all free. Gratis. On the house.

Aha, you say, that’s how the funds squander the money they ought to be saving to reduce their outlandish expense ratios.

Possibly so, but this stuff costs next to nothing compared with advertising time on the networks or manning a 24-hour telephone line.