What makes for a ‘diversified’ investment portfolio?
Many believed it was achieved through a traditional managed fund you bought from your favourite life assurance company that included stocks and shares, cash, bonds and property.
It was certainly the number one choice for a generation of parents trying to save for their children’s college education and even for pension fund members contributing into the company pension scheme.
Sadly, these managed funds – or mutual funds as they are known in the US – have returned nil to very low performance figures over the past decade and their high charges and fees have also been a major drag on fund performance.
These ubiquitous funds have gone some way to discouraging fund investment altogether in recent years.
Times have indeed changed. Many commentators and advisors are steering away older clients in particular from western stock markets generally which they say are overpriced and unlikely to see any growth for many years.
Only specific stocks – ‘global dominators’ paying steady dividends are worth buying they say and even they will be subject to price falls.
Diversification of your investment portfolio, they say, has never been so important and it means spreading your exposure and your risk away from both single assets – like stocks and shares, property, cash – but away from single sectors.
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