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Fisher Investments on Diversification
Many are likely familiar with the old adage "don’t put all your eggs in one basket." What this means is an investor should not invest too heavily in one investment at any given time. This might be as broad as not having all your money in real estate without any stocks, or as specific as not having all your stock holdings in one particular company or industry. This way, if the company goes under or the real estate market is down, there are other investments to help offset these risks.
Diversification is a key component to portfolio management and helps mitigate risk. At Fisher Investments, we factor in diversification into every portfolio we create, incorporating a broad mix of foreign and domestic securities and maintaining exposure across a broad range of sectors. This diversification can help minimize exposure to unforeseen events and help maximize clients’ returns over the long term.
Benchmarking provides a framework for effective diversification. By structuring and managing portfolios against a global benchmark like the MSCI World Index, we seek to maximize opportunities globally, while avoiding heavy concentrations in a particular area. Furthermore, we may overweight or underweight countries or sectors we believe are likely to outperform or underperform, respectively. This can help add value without “betting the farm” and exposing you to undue risk.
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