Diversification

A core investment principle is to spread your risk. Practically, this often means investing in companies that operate in different sectors, in different countries.

An investment portfolio that’s well-diversified is more robust than one relying on the fortunes of a handful of companies.

Global investment markets

Around the world, investment markets are trading equities and bonds. Equities are shares in companies. Bonds are loans to companies and to governments.

Investment markets are separated into categories so we can differentiate between companies by size, type and geography. Each category is called an Index, and if there’s more than one they are called Indices. A common index in the UK for example is the FTSE 100, which lists the UK’s largest 100 companies.

Our portfolios are designed to mirror the returns made by Indices for global investment markets. We use the Indices as a benchmark.

There are fees and taxes involved in buying and selling shares or bonds, so it’s impossible to have an investment portfolio that precisely mirrors the Index returns. Our aim is to get as close as possible. Our portfolios typically deliver returns within 0.5% - 1% of the Indices we track.

Geographical spread

Our investment portfolios track investment markets throughout the world. We don’t invest in every country, sometimes because it’s not possible and other times because their markets are not mature or established enough to give the rewards you might expect for the risk taken.

The spread between the different global investment markets in our portfolios is typically as shown here.

More information

To understand more about why we invest in this way, please read our investment philosophy, or get in touch to ask your questions directly.

You can read about the volatility of this portfolio and its diversification, showing how the underlying investments are spread across the world.

Important notes

As with all investing, your capital is at risk. The value of your investment portfolio can go down as well as up. You may get back less than you originally invested.