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Minimising Risk

Diversification is just another way of saying ‘don’t put all your eggs in one basket’. When you diversify or ‘spread’ your investments across a number of different assets and asset classes it can help reduce risk. As if one asset does perform poorly, you still have other assets to offset the loss.

By diversifying into a variety of investments and across investment managers you’ll reduce the impact of any significant movements (up or down) to individual investments.

Impact of 50% drop in the value of 1 stock

The diagram above has been provided for illustrative purposes only.

Investment Tip - Core Satellite Portfolio

Although good active investment managers exist, given the uncertainty that will always surround performance of even the best active managers, it may make sense to use them in combination with index funds to more effectively manage risk .

Index funds are cost effective and by combining them with actively managed funds, together, you can create a ‘core satelite’ portfolio at a lower cost than a 100% active fund alternative and with the added benefit of reducing your risk.

Core Satellite

Find me the right mix

  1. Identify your risk profile
    If you don’t know what your risk profile is, take our Investor Profile Quiz.
  2. Choose a fund that suits your risk profile
    Sandhurst offers five actively managed funds and five index funds that range from defensive to high growth which may match your risk profile. To find out more information, click here