Diversification in three dimensions.

Maintaining investment diversification is critical to long-term investing success. At Patrumin we look carefully at diversification in three dimensions when we construct portfolios.  They are:

  1. It should have sector diversification–exposure to multiple sectors and industries in the economy
  2. It should have capital structure diversification–exposure to companies that do and do not utilize long-term debt
  3. It should have market capitalization diversification–exposure to companies that are smaller and large in capitalization, within the stated investment mandate.

*Diversification does not guarantee a profit or protect against loss in a declining market; it is a method used to help mitigate investment risk.