DIVERSIFICATION
10 May 2016 By PDSNETThe process whereby a company (or individual) spreads its investments among a number of different enterprises so as to reduce its exposure through one of them. Research conducted in America has shown that diversification of a portfolio reduces risk until approximately 15 different shares are held. Thereafter, the reduction in risk is immaterial while the effort of following additional shares remains the same. This is the reason why students are advised to hold between 5 and 15 shares.
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