When Investing Wide Goes Narrow

Investing in a broad index can bring concentration risks if you're not careful

Ian Tam, CFA 22 June, 2020 | 1:11AM

 

 

Ian Tam: What would you think if I told you to put one-third of your equity portfolio in a single stock? Most conservative investors would quickly agree that this is a pretty risky move and would be contrary to what age-old investment theory tells us about diversification and risk. But surprisingly, this is precisely what many Canadians did back during the dotcom bubble by simply investing in the index.

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About Author

Ian Tam, CFA  is Director of Investment Research at Morningstar Canada. 

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