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Diversification

Investing glossary

Definition

Spreading exposure across assets or risk drivers to reduce concentration in any one source.

Hypothetical example

Several technology stocks can still share the same industry risk. More holdings do not automatically mean more diversification.

Keep in mind

Diversification cannot prevent every loss. Different funds may hold many of the same securities.

Official reference

www.investor.gov ↗

Examples are illustrative assumptions, not investment recommendations.