Diversification is done to reduce the risk. There are different ways in which an investment portfolio can be diversified. It can be diversified through asset allocation, by determining investor’s risk appetite, by diversifying within an asset class and investing through equity mutual funds. These equity mutual funds will be managed by fund managers or investment experts, who ensure that your funds are diversified across several sectors that will provide the maximum returns. If you buy an equity mutual fund, you get the benefit of owning a diversified equity portfolio that will also be managed by a fund manager.
Diversification helps all types of investors to make sure that their funds are under less risk. By knowing the risks and rewards of the investments made, you will be able to make the right bet according to your requirements. In earlier years, it would have been difficult for people to measure how well their funds were being diversified. With digital advisory solutions coming into play, investors can now diversify their investments conveniently.