Diversification is a very good idea and very effective in practice. However, many people only know one thing about diversity, but they don't know another. They only know how to diversify their investments and allocate different assets from different angles, but they don't know how to allocate assets.
For example, the diversification of funds, how many funds to buy appropriate? The more funds buy, the better the effect of diversification?
If venture capital wants to achieve results, it must be decentralized and collocated at the same time.
Next, we will show you about diversification.
How much money is appropriate for diversification? The more funds, the better the effect of diversification?
With regard to the most suitable number of funds to hold, Morningstar, an authoritative fund rating agency, once conducted an investment test: the test objects were different number of fund portfolios, ranging from 1 fund portfolio to 30 fund portfolios, and the five-year fund performance /bbsj/ fluctuation degree of each portfolio was calculated respectively.
The results show that when there is only one fund in the portfolio, the volatility of the whole portfolio is the largest, and with the increase of the number of funds in the portfolio, the volatility data will gradually decrease.
Until the number of funds in the portfolio reaches 7, the effect of improving volatility is the most obvious. After that, with the increase of the number of funds, there is no obvious inevitable relationship between the volatility of the portfolio and the number of funds in the portfolio. Even if the number of funds continues to increase, it will increase the volatility of the portfolio.
It can be seen that in a fund portfolio, it is more appropriate to control the number of funds at around 7 or less. It can achieve a better effect of dispersing risks.
The amount of funds should also consider one's own ability. When the number of funds increases, they have the ability to keep up with each fund in the portfolio and make timely adjustments.
How to allocate funds in the portfolio
The problem of the amount of funds has been solved, and the next step is how to allocate it. What kind of fund to allocate.
To realize diversified investment, it is necessary to ensure that the correlation of various assets allocated is at a low level. The lower the correlation, the lower the volatility of the portfolio.
For example, the volatility of seven stock funds in a portfolio is definitely different from that of three stock funds, two bond funds and two index funds in the portfolio.
To achieve the effect of asset allocation, we can choose stocks, bonds and cash to allocate assets, that is, to build a fund portfolio including stock funds, bond funds and money funds.
According to the characteristics of risk and return, equity funds have the highest risk and the highest expected return, while monetary funds have the lowest risk and the lowest expected return.
Each investor should allocate various assets in different proportions according to his own risk tolerance.
If it is relatively stable, you can increase the position of bond funds. If you want to get higher returns, you can take certain risks and increase the positions of equity funds.
At the same time, when choosing stock funds, we also need to choose stock funds with low correlation. If you choose two stock funds managed by the same fund manager, they are both in the style of market growth, which is not much different from buying a stock fund.
It can be considered from different fund companies, different sectors, different operating strategies and so on.
I hope the above contents are helpful to you.