Diversification:"Don't put all your eggs in one basket"

Whether you want to invest in shares or across a broad range of asset classes, unit trust funds provide you with one benefit that can be very hard for individual investors to achieve - diversification.

Diversifying across asset classes

One way of reducing risk over short periods of time is to spread your investment over a number of asset classes - commonly referred to as diversification. Or, as the saying goes, "don't put all your eggs in one basket". Why? Because different asset classes tend to experience good performance at different times. By avoiding having all your money in just one investment, the high returns you may receive from one investment can help you offset any poor performance that might be occurring in another, thus enhancing the consistency of returns.

Diversifying within asset classes

The benefits of diversification do not just occur if you are investing across asset classes- diversification should also occur within asset classes. For example, you may decide to diversify within shares by investing in some companies in the construction, properties, industrial and finance sectors. Alternatively, you may decide to diversify within fixed income assets by investing in corporate and government bonds with varying maturity dates