Diversified Fund

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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 ?
His extensive experience includes eight years serving as president of the Chappell Companies, a Canadian-owned group of diversified investment companies which funded over a dozen venture capital investments, many of which were provided with full incubation and management services.
PFD was organized in 1991 and PFO was organized in 1992 as closed-end, diversified investment companies which invest primarily in preferred securities.
About PFD and PFO: PFD was organized in 1991 and PFO was organized in 1992 as closed-end, diversified investment companies which invest primarily in preferred securities.

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