PORTFOLIO DIVERSIFICATION

• Diversification is the strategy of combining

distinct asset classes in a portfolio in order to
reduce overall portfolio risk.

• In other words, diversification is the process of

selecting the asset mix so as to reduce the
uncertainty in the return of a portfolio.
 MODE OF DIVERSIFICATION
• Diversify within an Industry

• Diversification Across Industries

• Diversify Across Geographical Regions

• International Diversification

• Diversification Across Asset Classes

MARGINAL PRODUCTIVITY OF
INCREMENTALL ASSETS
 PERILS OF EXCESSIE
DIVERSIFICATION
• Overdiversification means selecting too
many securities in a portfolio.