It’s a tenet of investing drilled into first-year business students: A diversified portfolio offers lower risk and higher returns than investing in single assets, as Investopedia explains. After all, the likelihood that several unrelated types of assets will move in the same direction at the same time historically has been pretty low. That’s why many corporate treasurers must follow a diversification strategy that’s laid out in their company’s investment policy.
However, investors – whether individuals or companies – can’t assume that adding new instruments to their portfolios automatically mitigates risk, says Lance Pan, CFA, and director of investment research with Capital Advisors Group, in Newton, Mass. Pan also is the author of a recent white paper, “Prudent Risk Diversification.” more








