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.
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References in periodicals archive ?
Balance - Develop a suitable asset allocation using broadly diversified funds. A successful investment strategy starts with an asset allocation suitable for its objective.
FAIRX is a non-diversified fund; FOCIX is a non-diversified mutual fund; and FAAFX is a non-diversified mutual fund, which means that all these funds invest in a smaller number of securities as compared to diversified funds.
METROPOLE Gestion, which has EUR6bn in assets under management, will integrate SimCorp's multi-asset class solution across its range of equity, fixed income and diversified funds.
Preqin found that earlier vintages of diversified funds had a higher median net internal rate of return, but that the trend reversed in 2005.
For instance, in 2008, balanced funds lost 42% value on an average, while equity diversified funds fell 53%.
These are diversified funds which limit their portfolio to a few stocks but not to any particular sector or theme.
According to Srividhya Rajesh, fund manager at Sundaram BNP Paribas Mutual Fund, focused funds are meant for investors who are familiar with equities; first-timers are better off with diversified funds. This is because choosing a sector requires some knowledge about the factors influencing its business.
These companies include Wealth Management Groups, Private Banking Groups, Diversified Funds, Consumer Finance, and Health Care Companies.
By investing into a variety of diversified funds spread across multiple geographies and industries as well as offers them an exclusive access to specialist asset managers.
Comisky said the Bar made money in most of the diversified funds it invested in, but had the best return on those investing in small cap and large cap stocks.
The firm said that it would lower the management and trailer fees on certain series of the HSBC World Selection(R) Diversified Funds.
In 2009, diversified funds returned 81 per cent while the rate of inflation was 11.45 per cent.

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