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Diversification

What is diversification?

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Diversification is the key way to manage investment risk and is based on the idea of using the gains in some assets to cushion the potential fall in value of others.

You can do this in a number of ways: holding a portfolio of shares rather than a single share; holding a number of different portfolios rather than a single fund; and holding funds across a number of different asset classes, geographies or investment styles.