9 ways to diversify your portfolio

Four classic ideas that work, and five new ones to consider

Yan Barcelo 26 March, 2019 | 5:00PM

As a recent article showed, the classic takes on portfolio diversification don’t work any more. To make a portfolio hold steady through bad markets and still shine in good ones, investors must extend their notion of diversification and, in many cases, go beyond it.

Devised in the 1980s, the notion of diversification distributed a portfolio’s allocation across geographical regions and asset types. Globalization has blown that idea to pieces: world markets and many asset types now pulse in sync.

And as a result, as a T. Rowe Price study points out, during the 2008 financial crisis “not only did correlations increase on the downside, but they also significantly decreased on the upside. This asymmetry is the opposite of what investors want. Indeed, who wants diversification on the upside?”

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About Author

Yan Barcelo  is a veteran financial and economic journalist with more than 30 years of experience, writing for many publications in Toronto and in Montreal, including CPA MagazineLes Affaires and Commerce.

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