Portfolio diversification is one of the most effective ways to reduce risk, preserve wealth and improve returns.
Diversification is a way of ‘taking a bet each way’ with your investments. As no one really knows what the future will hold, spreading your “bets” across different investments enables you to reduce the risk of making the ‘wrong’ decision.
At Six Park, we utilise a range of carefully selected exchange-traded funds (ETFs) to deliver you highly diversified portfolio holdings.(1) Using this approach, your money is invested across literally thousands of companies, sectors, asset classes and positions – instantly and inexpensively delivering you a truly diversified portfolio.
As part of our focus on asset diversification, we ensure your portfolio includes appropriate allocations to Australian-listed ETFs that invest in international markets and opportunities.
No investment, not even government bonds or bank deposits, is ever completely safe. If your portfolio is narrowly invested (e.g. in a limited number of assets or sectors), an unexpected change in conditions affecting those assets or sectors could have a dramatic impact on your returns. However, if your investments are spread across a wide variety of sectors and “uncorrelated” assets, each with different characteristics and profiles, then the risk of your portfolio being impacted by change will be reduced. This is because the negative performance of some investments will tend to be neutralised by the positive performance of others – and over the longer term, the entire portfolio will be expected to yield higher and less volatile average returns.
While we’re proudly Australian, we don’t limit our investment pool to the local market. Investing in the global market gives you better investment opportunities and risk mitigation benefits.