Portfolio diversification

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 ?
Kirdar, Executive Chairman and CEO, said, "We are pleased by the progress we have made against a backdrop of slow recovery in the world economy, which is a testament to our model of offering investors the opportunity for international portfolio diversification. As we enter our fourth decade, our plans to invest in our office network across the Gulf are well underway, with our Riyadh office expanded and new offices in Abu Dhabi and Doha pending regulatory approval.
Mark Dupont also added that such type of fund can be a huge and unique tool for individual investors for the reason that this can give opportunity to access institutional superior strategy to possibly enhance their particular portfolio diversification which can also provide great chances of positive earnings in the future.
Motiwala highlighted, 'The current investment philosophy of retirement funds is based on passive portfolio management, minimal portfolio diversification and No tactical investment strategy'.
Portfolio diversification came in second, with 31% ranking it most important.
Portfolio diversification did little to ward off mutual fund losses.
They also needed to ensure that all banks that engaged in lending to foreign borrowers had sufficient information on aggregate lending to make informed decisions about portfolio diversification. The Country Exposure Report (form 009 of the Federal Financial Institutions Examination Council) was developed in 1976 to provide that information; it has become a key source of data on country exposure for the agencies, as well as for many commercial banks and other interested parties.
It seeks to provide a comprehensive real estate holding designed to provide a combination of current income, capital preservation, long-term capital appreciation and enhanced portfolio diversification
Barcelona/London: Criteria Caixa S.A.'s (Criteria, BBB/Stable) EUR3.4 billion divestment in Abertis (BBB+/RWN) will be positive for its credit profile, if Criteria applies proceeds to debt deleverage and portfolio diversification, Fitch Ratings says.
In addition, the continuing funds will benefit from larger asset bases, allowing for increased portfolio diversification opportunities.
TCG's objectives in acquiring Mad Marketing Lab are to create portfolio diversification, synergies to other subsidiaries of the company and establish a stronger international presence in the market.
Leaders of the UAEs wealth management sector spoke about todays need for greater portfolio diversification including the benefits of a dynamically managed asset allocation policy.
Commenting on the merging of two leading brokers, Kaufmann-Rothstein International's COO Lindsay Kornemann said: “Managed futures programs are among the most significant aspect in portfolio diversification and with the recent partnership with Lorence & Vander Zwart, we are excited to experience a totally beneficial fusion of expertise, technology and trading strategies.”

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