1. What is diversification and why is it important?

Frequently Asked Questions

What is diversification and why is it important?

“Most investment professionals agree that, although it does not guarantee against loss, diversification is the most important component of reaching long-range financial goals while minimizing risk”*.

The simplest example of diversification is provided by the proverb "Don't put all your eggs in one basket". Dropping the basket will break all the eggs. Placing each egg in a different basket is more diversified. There is more risk of losing one egg, but less risk of losing all of them.

Our strategy spreads the risk of investing across a number of investment managers, investment strategies and markets. We further diversify your savings by combining property, infrastructure, international equities, fixed interest, and cash assets with our chosen investment funds to create our Growth Fund. The Focused Growth Fund is similar to the Growth Fund except that it has a higher weighting of international equities investments and a lower weighting of fixed interest investments. We also offer a conservative Fund that invests in these same property, infrastructure, fixed income and cash assets. The Conservative Fund also holds direct investments in international equities.

*Investopedia “The importance of diversification