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The Case for Diversification

We diversify your investments across multiple asset classes and geographies to reduce the risk of downturns in your portfolio. Here is a simple example to illustrate how diversification reduces risk.

A single pane window

Imagine that you are standing in front of a large window.

What would happen if a rock was thrown through the window?

Obviously, the window would shatter, and the entire window would need to be replaced.

A single pane window
A single pane window

Now imagine instead that your window has multiple panes of glass. If one pane breaks, the entire window is not lost. The protection offered through diversification is the ability to reduce the impact of “rocks” that are inevitable.

Of course, you can have many panes in a window. Diversifying your portfolio by adding multiple asset classes and geographies reduces the risk posed by any single event. For instance, rising interest rates may affect certain asset classes much more than others. Political instability in an emerging market company may not have a drastic effect on the developed market portion of your portfolio. At AssetBuilder, we protect your portfolio from the inevitable “rocks” by diversifying across asset classes and geographies.