How does diversification benefit my portfolio?

Diversification is designed to increase a portfolio’s risk-adjusted returns by reducing portfolio risk or volatility for every level of return or maximizing return for every level of risk. Proper diversification is implemented by investing in a sufficiently large number of securities that represent a set of relatively uncorrelated asset classes and geographies.


Was this article helpful?

Wealthfront prepared this article for informational purposes and not as an offer, recommendation, or solicitation to buy or sell any security. Wealthfront and its affiliates may rely on information from various sources we believe to be reliable (including clients and other third parties), but cannot guarantee its accuracy or completeness. See our Full Disclosure for more important information.

Wealthfront and its affiliates do not provide tax advice and investors are encouraged to consult with their personal tax advisor. Financial advisory and planning services are only provided to investors who become clients by way of a written agreement. All investing involves risk, including the possible loss of money you invest. Past performance does not guarantee future performance.