Safety comes from spreading it wide - Mary Holm
Monday 13 December 2004
Q: There is an issue that your readers might consider when they try to diversify their portfolio.
Diversification is not related to the number of different shares that you have in your portfolio.
Having a portfolio of many real estate developers is not diversification, even if you have 20 different firms in your portfolio. Diversification depends on the relationshi
By The Landlordp between those shares (their correlation).
You can have a diversified portfolio by holding a biotech share, a computer software share and shares in a hedge fund. You have a risky portfolio but well diversified nonetheless.
A: You make a really good point that I should have made more clearly in recent columns. I think, though, that you overstate your case.
The more shares you hold, the more diversified you are - even if they are all in the same industry.
While economic, legislative and other factors affect all the companies in an industry, there are also many company-specific factors that affect a share price.
Read More - Opens in a new window
Commenting is closed
It’s full steam ahead for the Stevenson Group’s $800 million, 361-hectare industrial and residential development in South Auckland – despite the uncertainties of the post-Covid-19 era.
The Reserve Bank says the commercial property sector is vulnerable to the Covid-19 crisis. But PMG Funds' chief executive believes that while there’ll be short-term pain, the biggest long-term impact will be structural change.
Mortgage lending fell to its lowest level on record last month as the property market ground to a halt during the Covid-19 lockdown.