Diversification is a well-known risk management technique that mixes a wide variety of investments within a portfolio. The advantage of the combination of investments in a diversified portfolio is that it will probably lead to more optimized returns and pose a lower risk than any individual investment within the portfolio.
Investors have looked to the alternative asset classes as a way to provide this diversification. Commodities of which diamonds are part are an alternative asset class that has grown in attractiveness in recent years.
In general, the following investment mix is highly recommendable in case you want to lower the overall risk and increase the chance at yielding higher returns on your investment portfolio:
- 1/3 real estate
- 1/3 fixed-interest securities
- 1/3 movable assets/commodities, such as diamonds
This means diamonds perfectly fit in an investment perspective of diversification and thus reducing unsystematic risk.
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