Diversified Fund

Diversified Fund

A fund that has invested in many different types of securities in order to hedge against the securities already in the fund. Ideally, this reduces the risk inherent in any one investment, and increases the possibility of making a profit, or at least avoiding a loss. This may also reduce the expected return on the fund, but it depends on the level and type of diversification. There are two main types of diversification that a fund may utilize. Horizontal diversification involves investing in similar investments. Examples include investing in several technology companies or in different types of bonds. Vertical diversification involves investing in very different securities; for example, one may choose to invest in securities traded in different countries, or in both winter clothing and swimsuit companies. Both types of diversification may be as broad or as narrow as the fund's manager chooses. In general, broader diversification equates to less risk and less return.
References in periodicals archive ?
Legal & General Investment Management (LGIM) is delighted to announce that its Diversified Fund has passed Au1 billion in assets under management, with LGIM now managing a combined Au2.
Daley, executive vice president of Richman, "Fund 89 was a nationally diversified fund while Fund 95's targeted acquisitions were limited to New York City.
A diversified fund can change sector weightages depending on the fund manager's research, says Jayesh Gandhi, executive director, Morgan Stanley Investment Management.

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