Portfolio Diversification Overview
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Diversification is an investment strategy meant to mitigate various risks by utilizing various asset classes within a portfolio.

The goal of utilizing various asset is to achieve higher long-term returns (on average), while reducing the risk of exposure to an individual holding or security.

By design, most insurance company and risk pooling portfolios are never fully diversified: A majority of the portfolio is allocated towards investment-grade fixed income to account for policy holder obligations, reserves and sufficient risk capital.

Thus, most diversification is conducted through ‘Risk Assets,’ such as High-Yield Bonds, Equities and certain long-term Schedule Ba investments, such as Bank Loans.

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