Portfolio diversification


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Portfolio diversification

Investing in different asset classes and in securities of many issuers in an attempt to reduce overall investment risk and to avoid damaging a portfolio's performance by the poor performance of a single security, industry, (or country).

Portfolio Diversification

In risk management, the act or strategy of adding more investments to one's portfolio to hedge against the investments already in it. 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 a portfolio, but it depends on level and type of diversification. There are two main types of diversification. Horizontal diversification involves investing in similar type 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 narrow as the investor chooses. In general, the broader the diversification, the less risk and less return. See also: Markowitz Portfolio Theory.
References in periodicals archive ?
The fund seeks to provide investors with an additional source of portfolio diversification and return over varying market environments.
The book's primary message is that risk can be reduced through proper portfolio diversification.
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Mahesh Kumar, BA, ACMA, ATT, CMC, MBA, DipIc's Wine Investment For Portfolio Diversification (1891267841, $45.
They also discuss bonds and other instruments for reducing volatility and creating portfolio diversification.
com enables buyers to increase portfolio returns, manage portfolio diversification and to opportunistically acquire sub or non-performing loans from sellers with a more conservative risk/reward profile.
There are other economic considerations that support the case for global portfolio diversification.
B's needs for cash and portfolio diversification can be met and at a substantial tax savings.
To obtain more information about the Fund, including top ten holdings, recent performance and portfolio diversification, please call 888-777-0102.
According to Justin Beckett, president of New Africa Advisers, the fund represents a unique approach to portfolio diversification.
RiverSource(SM) Strategic Allocation Fund is for clients who need portfolio diversification and are seeking alpha generation with built-in risk management.

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