The phrase
"broad diversification" means spreading your investments across different types of assets to reduce risk.
Full definition
These funds can't be customized, but if their costs are low they can be a good way to
get broad diversification with low maintenance.
Founded in 1990 with just two investment options, the fund company has expanded and now offers eight funds, providing
for broad diversification by asset class.
In doing so, you will adopt an entirely passive index investment strategy, which will inevitably be a lower risk strategy due to the
very broad diversification provided by passive index investment strategies.
However, for investors willing to do the work, investing in individual stocks can lead to much higher returns than
broad diversification into index funds.
Our firm's policy is to
maintain broad diversification in client portfolios while making small adjustments on the margins of our allocation strategy in response to the changing landscape.
The obvious solution is
broad diversification not only by asset class, but also within the fixed income asset class by quality and strategy.
Our old fashioned style embraces humble skepticism and is wary of most modern risk management tools and ideas (
i.e. broad diversification, financial models, derivatives, etc).
When you
combine broad diversification and rock - bottom costs you get exactly the kind of index fund you should look for when assembling a long - term portfolio.
In the beginning, starting with a target date fund is a good way to go in order to
get broad diversification in a portfolio that is age - appropriate.
The lifecycle funds give investors a balanced and hands - off approach
for broad diversification, and potentially help them sleep at night.
They generally
provide broad diversification and will handle complicated issues, such as foreign tax payments and currency conversions, on behalf of investors.
Domestic stock funds offer all of the standard benefits that come with any type of mutual fund, such
as broad diversification, professional management and liquidity that is packaged into a convenient vehicle that makes it accessible to even the smallest investors.
But you'll be able to achieve the goal of
broad diversification much easier by focusing on index funds or ETFs that cover broad swaths of the market.
Differentiated risk process Winslow's «No Preferred Habitat» approach
seeks broad diversification and may help manage risk by not being overexposed to any one area of the market.
These components are weighted on an annual basis by BlackRock's Portfolio Strategy Team depending upon their forward - looking view of the market environment, which in turn gives
clients broader diversification for more growth opportunities.
Investing in several mutual funds that have different investment objectives will give the investor an
even broader diversification but ones with only a few stocks focusing on particular sectors are called non-diversified portfolios.
These types of mutual funds can be great for first time investors; within just one mutual fund, you will have
broad diversification between various types of mutual funds: large cap mutual funds, small cap mutual funds, international mutual funds, etc..
This idea of
broad diversification reaches its zenith, of course, in index funds where the fund manager's admitted raison d'être is that he, or she, knows absolutely nothing about the underlying securities which are either in portfolios or the components of indices.