How Investors Can Avoid The Scourge Of Overdiversification “Investors who see diversification as a savior subject themselves to a tremendous scourge of lower returns from excess diversification.” Diversification is a key part of successful long-term investing but it is also possible to overdiversify, and when this occurs, returns suffer. Active fund managers and private investors try to diversify as much as possible. Theory dictates that this should help you lower risk and by widely diversifying, funds minimize their chance of underperforming the index. However, many active fund managers overdiversify their funds to reduce portfolio volatility, which in turn reduces the…
How Investors Can Avoid The Scourge Of Overdiversification
Sign up now and get our in-depth FREE e-books on famous investors like Klarman, Dalio, Schloss, Munger Rupert is a committed value investor and regularly writes and invests following the principles set out by Benjamin Graham. He is the editor and co-owner of Hidden Value Stocks, a quarterly investment newsletter aimed at institutional investors. Rupert owns shares in Berkshire Hathaway. Rupert holds qualifications from the Chartered Institute For Securities & Investment and the CFA Society of the UK. Rupert covers everything value investing for ValueWalk