Diversification: Risk Management Through Asset Allocation
By Imperialpedia Staff
Diversification is a risk management strategy that mixes a wide variety of investments within a portfolio to limit exposure to any single asset or risk. The rationale is that a diversified portfolio will yield higher returns and pose lower risk.
Types of Diversification
Effective diversification includes asset class diversification (stocks, bonds, real estate), geographic diversification (domestic and international), and sector diversification (technology, healthcare, finance).
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