Diversification

Whatever your personal investment mix, an important investment principle is diversification. Most of us were cautioned as children “not to put all our eggs in one basket.” That is all diversification means. You spread your risk by diversifying your investments, so that losses in one investment might be offset by gains in another.

You can diversify in several ways

You can diversify by dividing your portfolio among different investment asset classes. Rather than holding all equities (stocks), for example, you invest a portion of your portfolio in stocks and a portion in other vehicles such as bonds or cash equivalents. The prices or values of all these different types of investments will not usually fluctuate at the same time or in the same degree. This is the principle behind both MMBB’s Balanced Fund and MMBB’s New Horizons Fund.

You can also diversify within a particular class or type of investment. You may want to diversify your equity investments, for example, by investing some in U.S. equities and some in international equities, or some in a passively managed fund and some in an actively managed fund.

Because of our size as an institutional investor, MMBB can—and does—diversify our investments on your behalf in a third way. MMBB is able to engage a variety of professional investment managers—specialists in particular types of investments—to handle specific components of our investment portfolio. This adds a level of diversification and expertise that an individual investor cannot achieve on their own.