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Diversification is the Key to
Reducing Investment Risk.
There are two ways of reducing investment
risk. The first is to invest in low risk/low reward investments
such as money funds and short-term bond funds. The second
way, and the way Spectrum prefers, is to diversify among
several investment methods which all have the ability to
produce attractive returns, but are unrelated to each other
in terms of what drives performance. By selectively combining
Strategies, portfolios can be created for each client based
on their individual investment objectives and risk tolerance.
Each Spectrum strategy is risk rated on a scale of 1 to
5, where 1 represents little risk, such as investing in
money funds, and 5 represents the risk comparable to investing
in a buy-and-hold, aggressive growth strategy. By allocating
assets within these risk parameters, clients are able to
build risk adjusted portfolios designed to match their tolerance
of potential losses and investment objective.
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