Diversified or Just Duplicated?
With over 3,500 equity mutual funds and ETFs available, it may seem easy to build a diversified portfolio. But is that really the case? When you consider how many of these funds hold major companies like Microsoft, Apple, and Nvidia, you'll discover over half of them do, leading to significant concentration risk.
Even with different managers or funds, true diversification can be elusive. Our key value is not only managing the exposures within our individual sub-strategies but also within our overall models to reduce overlap and mitigate concentration risk.
Diversified or Just Duplicated?
Source: Bloomberg, Redwood. Data as of 8/16/2024.
Regards,
Allgood Financial
Disclosure: This piece is for informational purposes only and contains opinions of Redwood that should not be construed as facts. Information provided herein from third parties is obtained from sources believed to be reliable, but no representation or warranty is made as to its accuracy or completeness. Charts and graphs are for illustrative purposes only. Discussion of any specific strategy is not intended as a guarantee of profit or loss. Past performance is not a guarantee of future results. The objectives mentioned are not guaranteed to be achieved. Investors cannot invest directly in any of the indices mentioned above. RiskFirst® is a registered trademark of Redwood Investment Management, LLC.
