Diversification is not a free lunch

Tim Farrelly | farrelly's Investment Strategy | 22 August 2018 | 0.25 CE

Harry Markowitz called diversification "the only free lunch in finance" and his elegant mathematical theory won him a Nobel Prize and laid the foundations for Modern Portfolio Theory. However, while diversification can be a free lunch, it can’t be taken for granted. Not all diversification is good and not all lowly correlated assets are good diversifiers. For diversification to help future-proof portfolios, we ...