The “New Diversification” is a phrase coined by BlackRock in acknowledgment of the fact that traditional definitions of diversification have their shortcomings—a hard lesson borne out in the 2008 credit crisis. Now, more than seven years on, this evolved form of diversification remains as important as ever. Dr. Christopher Geczy offers his views on why widening your sources of risk and return is always a prudent approach—in good times and in bad.
"Investors cannot necessarily rely on what is traditionally thought of as diversification to meet their long-term goals."
- Many investors did not have exposure to enough different asset classes during the most recent crisis, resulting in limited protection from downside risk. Many very likely remain underdiversified today.
- Investors should consider incorporating a much wider range of strategies and assets as part of their core investment strategy.
- The notion of "alternative" investing is often misunderstood. Gaining access to different types of investments is an approach that almost everyone should employ, and many strategies are now available to a broad range of individuals.