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Industry allocation |
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Industry allocation Investment of certain proportions of a portfolio in certain industries. Sometimes called sector allocation. Industry allocation The act or practice of including securities in different industries in one's portfolio. This is done to reduce systemic risk. For example, if one includes both Industry A and Industry B stocks in one's portfolio, and most Industry A companies go bankrupt, this will not necessarily affect Industry B stocks. Industry allocation thus increases the possibility of making a profit, or at least avoiding a loss. This may also reduce the expected return on a portfolio, but it depends on the level and type of diversification. In general, the broader the industry allocation, the less risk and the less return. See also: Horizontal diversification, Vertical diversification. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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The industry allocation uses MSCI's industry definitions for the convenience of comparison. The industry allocation uses MSCI's industry definitions for the convenience of comparison. The industry allocation uses MSCI's industry definitions for the convenience of comparison. |
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