Portfolio Diversification

Written By Jonathan Sheahan

The reason for diversifying a Portfolio is to reduce risk while achieving a consistent investment return.

By allocating capital to asset classes that are not completed correlated with each other, market volatility and max drawdowns are reduced and investors can expect a more consistent level of returns over the medium to long term.

Portfolios can be diversified in a number of ways, such as:

  • Asset Class i.e. Equities / Bonds / Property / Private Equity / Alternatives / Cash

  • Geography & Sector within each Asset Class

  • Active Strategies v Passive Styles

  • Liquid v Illiquid

  • Custodian


Jonathan Sheahan
Managing Director of Compass Private Wealth, Dublin
www.CompassPrivateWealth.ie
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