I’m sure you all heard the ‘Don’t put all eggs in one basket’ right? Well to be honest it’s correct. And not only in different asset classes but even inside the same asset class. Let us explain.
A multi asset portfolio in the 1990s was generally speaking diversified between few stocks and bonds.
But a well diversified portfolio in the 2020s diversify not only in stock & fixed income markets, but also real estate, commodities, high yield funds which then diversify even more by currency, geographical exposure etc.
And there is another very important part of diversification inside the same asset class. Even for the part of your portfolio investing in stocks or bonds you need to be well diversified, as you never know which stock might underperform greatly or have a negative event. It is normal to have a negative event in one of your securities as no one knows how the future will be for listed companies. What you don’t want is this negative even to happen in the 10% of your portfolio.
With our portfolios investing in more than 2,000 securities, the impact would be very minimal.
This document does not constitute and shall not be construed as a prospectus, advertisement, public offering, or placement of, nor a recommendation to buy, sell, hold or solicit, any investment, security, other financial instrument or other product or service. This document is for general information only and is not intended as investment advice or any other specific recommendation as to any particular course of action or inaction.