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I. PROPER DIVERSIFICATION

Ineffective diversification, shown below, is the wrong way to invest. During a market downturn, if all investments are going down, diversification is not effective.

ineffective diversification

Effective diversification, also known as dissimilar price movement diversification, reduce risk by combing investments that moved dissimilarly, thereby reducing the volatility of a portfolio.

effective diversification

II. Lower Volatility

When comparing two portfolios with the same historical average annual return, the portfolio with the lower volatility will have the higher cumulative rate of return as shown below.

lower volatility

III. GLOBAL DIVERSIFICATION

Global diversification is one way for investors to try to protect themselves from a downturn in any single asset class, domestic or foreign. Our portfolios may contain more than 6,500 investments in 25 countries.

world market capitalization

IV. INSTITUTIONAL ASSET CLASS

Institutional asset class represents specific market segments and are used as tools to achieve effective diversification. The benefits of institutional asset classes are:

  • Low Trading Costs
  • Low Turnover
  • Low Style Drift

V. EFFICENT PORTFOLIOS

Every investor has unique financial objectives, investment attitudes and risk tolerance levels. An efficient portfolio is designed to provide the highest expected return for a chosen level of risk.

rebalancing

*Courtesy of Loring Ward Advisor Services. http://advisors.loringward.com/inv_aboutus.aspx