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The Power of Diversification

The Power of Diversification

“Could this be ‘the single most important chart’ when it comes to managing money?” is an article that examines the benefits of diversification, something we have covered a lot. Generally the focus is on the risk-reduction benefits of having a diversified portfolio (which are, of course, very desirable) – but this MarketWatch.com article looked at it from a slightly different angle, diversification can be seen as “turbocharging” expected returns per unit of risk. In other words, if you are looking to maximize your returns while putting a cap on the level of expected risk that you are willing to take, there is no better way to do so than through diversification.

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