Why Is Diversification Important? 1. Risk Reduction: The most significant advantage of diversification is the reduction of risks. For example, if the sector of technology is going down, then the losses... Read More
Author: Factsheet3
Among Different Funds: Another way in which diversification can be done by investors is through holding various mutual funds, where every mutual fund specializes in some different asset class or... Read More
In mutual funds, there are diversifications at two levels: 1. Within the Fund: A mutual fund usually invests in a wide range of securities, such as stocks, bonds, or real estate.... Read More
It involves making an investment across various assets or asset classes for reducing the risk involved. The logic is simple: if one does not put all his eggs in one... Read More
Managing risk is one of the main factors why people invest in mutual funds. Probably, no other concept found in investing can be viewed beyond diversification. Thus, this article explores... Read More
it is risk management through diversification with the hope of greater potential returns. By spreading investments in various asset classes, sectors, and geographies, a more robust portfolio is created. Diversification... Read More
Common Misconceptions on Diversification Some of the common myths on diversification are: 1. Diversification Will Automatically Result in Returns: As much as diversification can reduce risk, it never guarantees profits. Market conditions... Read More
5. Periodically Monitor Your Portfolio: Diversification is not a once-off. Periodically monitor your portfolio to ensure that it goes along with your investment objectives and risk tolerance. Rebalancing may be... Read More
3. Look for geographic diversification: Invest in funds that track both domestic and international markets. Because the global economic conditions differ, international investments also provide higher returns. 4. Index funds or... Read More
2. Diversification across different sectors: Under the equity funds, consider the funds that specialize in different sectors such as technology, healthcare, finance, and consumer goods. If one sector is not... Read More