A fund can be diversified: when there are changes in the market conditions, and therefore some sectors may outdo others at different times. One way of benefiting from changes in the market without requiring one to constantly change investment is through a diversified mutual fund portfolio.
Opportunity for Growth: Since investors are making different investment decisions, this opportunity helps tap into the available sources of growth. An investor may invest in various emerging markets that could lead to high growth rates or go for bonds to guarantee returns and income
Smoother Returns: Diversification may lead to stable returns over time. It could thus avoid the experience of peak and trough from one singular investment. The volatility associated with a portfolio might, therefore, be reduced and smoothed out.
3. Opportunity for Growth
. Risk Reduction: The most significant advantage of diversification is the reduction of risks. For example, if the sector of technology is going down, then the losses can be curtailed by having a diversified portfolio if other sectors like healthcare or consumer goods are performing good.
Opportunity for Growth: Since investors are making different investment decisions, this opportunity helps tap into the available sources of growth. An investor may invest in various emerging markets that could lead to high growth rates or go for bonds to guarantee returns and income.
Smoother Returns: Diversification may lead to stable returns over time. It could thus avoid the experience of peak and trough from one singular investment. The volatility associated with a portfolio might, therefore, be reduced and smoothed out sectors like healthcare or consumer goods are performing good.
1. Risk Reduction: The most significant advantage of diversification is the reduction of risks. For example, if the sector of technology is going down, then the losses can be curtailed by having a diversified portfolio if other sectors like healthcare or consumer goods are performing good.
. Risk Reduction: The most significant advantage of diversification is the reduction of risks. For example, if the sector of technology is going down, then the losses can be curtailed by having a diversified portfolio if other sectors like healthcare or consumer goods are performing good.