This year, I’m grateful for Diversification. Diversification is the only free lunch in investing. Let me repeat that. Diversification is the only free lunch in investing. As an investor, it allows you to dramatically reduce the range of possible outcomes in your investment portfolio, thereby making it easier to reach your financial goals. The range of performance of individual US companies this year was extremely wide and volatile. Think of it as a roller coaster with huge and frequent ups and downs. By diversifying, you were able to avoid some possible very negative outcomes. The video below provides a nice visual of the performance of the S&P500 year-to-date and gives an example of how increasing diversification, in this case by adding in small-cap companies, can help smooth the ride.
Video created by Jan Varsava.
This information is educational and does not intend to make an offer for the sale of any specific securities, investments, or strategies. These performance results do not represent the results of actual trading using client assets. The data presented uses historical data provided by third parties, specifically publicly-available S&P500 and AVUV performance. Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Return will be reduced by advisory fees and any other expenses incurred in managing a client’s account. A discussion of HIG’s advisory fees for new clients is linked here, and overall fees are described in our Form CRS and Brochure, linked here. Investments involve risk and past performance is not indicative of future performance; consult with a qualified financial adviser before implementing any investment strategy.