Diversification Video, part I

Join Alex Duty, CFA, CIPM, as he delves into the functionality of diversification. Learn more about investment strategies and the science of a well-diversified fund. Using Alex’s knowledge, one can better understand and achieve higher risk-adjusted returns. This is accomplished by employing a variety of different asset classes in a portfolio. “Diversification does not increase expected returns by itself. However, diversification does decrease volatility without compromising on expected return.”

The lessening of volatility can bring enormous peace of mind. To achieve this without forgoing expected returns is what investors want. The secret sauce of diversification brings it all together. Reducing exposure to the two core asset classes, stocks and bonds, allows for increasing exposure to alternative investments. As a result, there is a decreased correlation between assets in the portfolio. This, in turn, allows for returns to be maintained while at the same time leveling out the volatility. Furthermore, the smoothing out of “highs” and “lows” can help to preserve principal.

In this video, Alex will explain in depth why this strategy works for helping to achieve investment goals. Also, he will break down the mathematical logic and historical data in a way that is accessible. If you wish to read more about this topic, please take a look at Alex’s white paper on the subject. Enjoy the video and let us know if you have any lingering questions. Otherwise, stay tuned for part II next month!

The foregoing content reflects the opinions of Wealth Oaks Wealth Advisors, Inc. and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct.

Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns.

All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.