Well-diversified portfolio

Well-diversified portfolio

A portfolio that includes a variety of securities so that the weight of any security is small. The risk of a well-diversified portfolio closely approximates the systematic risk of the overall market, and the unsystematic risk of each security has been diversified out of the portfolio.

Well-Diversified Portfolio

A portfolio that has invested in many different types of security in order to hedge against the securities already in the portfolio. 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 level and type of diversification. There are two main types of diversification that a well-diversified portfolio may utilize. Horizontal diversification involves investing in similar types of 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 fund's manager chooses. In general, the broader the diversification, the less risk and less return.
Mentioned in ?
References in periodicals archive ?
Investing across geographical regions is one of the cornerstones of a well-diversified portfolio.
The automaker said, 'We have always considered that a well-diversified portfolio of funding tools gives us the necessary flexibility to offer appropriate and competitive financing options for our customers as well as our industrial investment needs.
That means developing a well-diversified portfolio which accurately reflects your strategy, constantly monitoring it in an objective way, and re-balancing when appropriate to stay in line with your goals.
As part of a well-diversified portfolio primarily invested in investment-grade bonds and other high-quality fixed-income instruments, Northwestern Mutual invests in commercial mortgage loans that it originates in the private market directly with owners of commercial real estate.
PH&N High Yield Bond Fund seeks to provide a high level of income and the opportunity for capital appreciation by investing primarily in a well-diversified portfolio of fixed income securities issued by Canadian and/or foreign corporations and governments.
The company has a well-diversified portfolio of assets with the lowest NPA (non-performing asset) ratio of 1.
The rating takes into account the company's established market presence, well-diversified portfolio and store locations, as well as strong cash flow protection.
However they wish to assure shareholders that they will continue to use their very best endeavours to achieve above-average performance from a well-diversified portfolio of quality smaller companies and thereby earn the right from shareholders for a continuation of this Trust.
The new BlackRock India Fund, offering a well-diversified portfolio of Indian companies, will expand BlackRock's existing open-end mutual fund product offerings in the US, which includes more than 120 funds.
According to Tim Howard, the Managing Director of Westcore Capital Limited Alternative Investment Strategy Fund, the recent condition of the financial market has stressed the needs for trading investors to look beyond traditional assets such as bonds and stocks to establish a well-diversified portfolio, "Progressively, we are noticing some investors who are starting to embrace alternative investment like managed futures as the best approach in managing portfolio risk as well as enhancing financial returns," Howard added.
Looking ahead, I believe the pace of the upcoming business cycle continues to warrant a place for quality growth stocks among other asset classes in a well-diversified portfolio.
Gutmann's letter spoke about maintaining "a well-diversified portfolio with a core position in treasuries, a focus on quality stocks with strong balance sheets and a strong emphasis on risk management.