Diversification is an investment approach, specifically a risk management strategy. Following this theory, a portfolio containing a variety of assets poses less risk and ultimately yields higher returns than one holding just a few.
 | | Term of the Day | Words to Know | | |  | | Diversification | | Diversification is a risk management strategy that mixes a wide variety of investments within a portfolio. A diversified portfolio contains a mix of distinct asset types and investment vehicles in an attempt at limiting exposure to any single asset or risk. The rationale behind this technique is that a portfolio constructed of different kinds of assets will, on average, yield higher long-term returns and lower the risk of any individual holding or security. | | Read More » | | Related to "Diversification" | | | | SPONSORED BY INVESCO | | The Complete Guide to ETFs | | ETFs are becoming increasingly popular and soaring to new heights among investors. Invesco's insights can help you determine if these investment vehicles are right for you. | | Learn More » | | | Portfolio Management | | Portfolio Management involves deciding investment mix and policy, matching investments to goals, asset allocation and balancing risk with performance. | | Read More » | | | Risk Management in Finance | | In the financial world, risk management is the process of identification, analysis and acceptance or mitigation of uncertainty in investment decisions. | | Read More » | | | Mutual Fund | | A mutual fund is a type of investment vehicle consisting of a portfolio of stocks, bonds, or other securities, which is overseen by a professional money manager. | | Read More » | | | | | | CONNECT WITH INVESTOPEDIA | | | | | | | |
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