Years ago, diversifying a large portfolio meant investing in 65 different companies in the country that you lived and worked in, rather than only 30. Fortunately for wealthy families today, spreading investment risk across more than one geography has become a lot easier.
But wealth managers, private banks and family offices say that even more needs to be done — with other assets — to ensure that global families are not still too exposed to local risks.
Diversification, in simple terms, means spreading assets across sectors and countries to reduce the overall impact of adverse price movements in any one of them. Without it, families are, in effect, betting that wherever they live or work will always produce the best investment returns in the world.