A Timely Reminder
- Topics:
- Commercial Lending,
- Strategy Formulation
- Tags:
- Asset Class,
- Diversification,
- Finance,
- Investment,
- Volatility
- Source:
- Thomson
FREE Registration is required
Overview: The recent market tumult offers a perfect opportunity to remember the advantages of a diversified, balanced portfolio. The diversification across asset classes remains an effective tool that planners should employ. This is mainly; markets today are roller coasters in which previously unexpected levels of volatility have become the norm. The benefits of diversification are powerful and robust, not just in terms of volatility reduction, but for return enhancement. To evaluate the desirability of an asset class as a portfolio building block, it is not enough to know only its return and volatility characteristics. One must also know how its pattern of returns correlates to the patterns of returns of the other portfolio components. All other things being equal, the more dissimilarity there is among the asset classes within a portfolio, the stronger the diversification effect, providing investors with not only less volatility but also greater returns in the end.
(Is this item miscategorized? Does it need more tags? Let us know.)
Format: HTML | Date: Oct 2000 | Pages: 1
Top results from Strategy Formulation
» View all Strategy Formulation listings
