What does diversification actually mean?

Diversification means spreading your money across many different investments, so that one bad result has a smaller effect on your overall portfolio.

A well-diversified portfolio spreads risk in several ways at once.

• Across asset types: shares, bonds and alternatives behave differently.
• Across regions: the US, Europe, Asia and emerging markets.
• Across sectors: technology, healthcare, energy, consumer goods and more.

Diversification can smooth out the ride and reduce the chance of a single company or country derailing your plans. It can't remove risk entirely; when markets fall broadly, a diversified portfolio will usually fall too, just less sharply.

Every WealthWise portfolio is built from low-cost funds that each hold hundreds or thousands of underlying investments, so you're diversified from your very first contribution.