An introduction from Barry Gill,
Head of Investments
An introduction from Barry Gill,
Head of Investments
To diversify, or not diversify?
To diversify, or not diversify?
The relevance of this question has arguably never been greater. Diversification is a central tenet of investment theory; from Markowitz, to Sharpe, to Scholes, Black and Merton, measuring and pricing risk consistently entails factoring in diversification. Yet, as the saying goes, “In theory, theory and practice are the same. In practice, they are not.”
At first glance, few would argue against the logic of diversification: ‘Spread your risk’, ‘think in bets’. The reality is more complex though. As Warren Buffett famously said, “Diversification is a protection against ignorance. … [It] makes very little sense for those who know what they’re doing.”
The psychological temptation to jettison portfolio diversity when only a handful of technology stocks would have served well, as would a decision to stay domestic, is huge. And not just for private investors. Style drift happens in equity portfolios as periods of underperformance drag on and the pressure to chase returns mount – even the most robust investment processes, philosophies and egos are susceptible.
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The Red Thread: The Diversification Edition
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The Red Thread video
To diversify, or not diversify?
To diversify, or not diversify?
Friend or foe? It is not always clear. This video takes a creative and unique look at the complex issue of diversification
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Introducing our leadership team
Meet the members of the team responsible for UBS Asset Management’s strategic direction.
