FP Login   Home  | About GetAlts  |  Contact Us  |  Site Map
 
 

Diversification in a Portfolio

Is your portfolio diversified? If you're investing in asset classes that perform similarly-especially in downward-moving markets-the answer could be no. That's because traditional portfolios are typically comprised of only stocks, bonds and cash. While stocks and bonds may provide some diversification, there are other investment opportunities that could provide even more.

As shown in the chart below, adding non- or moderately correlated asset classes-that is, those whose movements are not highly related to stock and bonds-increases a portfolio's diversification.

Historical Correlation

Correlation is a statistical measure of how two variables move in relation to each other. This measure ranges from -1 to +1, where -1 indicates perfect negative correlation and +1 indicates perfect positive correlation.

Performance displayed represents past performance, which is no guarantee of future results. Correlations are calculated using the monthly total returns of each index. All correlations are measured vs. the S&P 500 Index. The index returns do not include any management fees, transaction costs or expenses. The indices are unmanaged and are not available for direct investment. Click here for information on the referenced indices. This information is subject to change at any time, based on market and other conditions, and should not be construed as a recommendation of any specific security. Data source: Calculated by Rydex SGI using information from Bloomberg.com, Barclays.com and standardandpoors.com.

Diversification neither assures a profit nor eliminates the risk of experiencing investment losses.

Download a copy of our Asset Class Correlation Map for more information.

PreviousContinue

The alternatives strategies and asset classes mentioned are not suitable for all investors. Many alternative strategies use sophisticated and aggressive investment techniques such as leveraging, short selling and derivatives. The more you invest in leveraged instruments, the more the leverage will magnify any gains or losses on those investments. The use of short selling involves increased risks and costs. You risk paying more for a security than you received from its sale. Theoretically, stocks sold short have the risk of unlimited losses. The use of derivatives such as futures, options and swap agreements may expose an investment to additional risks that it would not be subject to if you invested directly in the securities underlying those derivatives. Additionally, certain alternative strategies tied to hard assets such as commodities, currencies and real estate, may be subject to greater volatility as they may be affected by overall market movements, changes in interest rates or factors affecting a particular industry, commodity or currency, -such as droughts, floods, weather, livestock disease, embargos, tariffs and international economic, political and regulatory developments. No investment strategy can guarantee a return in a declining market. Additionally, an investor could lose all or a substantial amount of their investment. For more information about these strategies and their risks please consult your financial advisor.

This material is not intended to be a comprehensive overview of the subject matters discussed. It is intended to be general in nature and should not be construed as investment advice or a recommendation of any specific security or strategy. Before investing in any of the investment products or strategies discussed, consult with your financial advisor to determine if they are appropriate for your objectives, risk tolerance, income level and investing time horizon.

Rydex SGI offers funds with investment strategies similar to those referenced on GetAlts.com.

Read the fund's prospectus and summary prospectus (if available) carefully before investing. It contains the fund's investment objectives, risks, charges, expenses and other information, which should be considered carefully before investing. Obtain a prospectus and summary prospectus (if available) at www.rydex-sgi.com or call 800.820.0888.

Rydex SGI Funds are distributed by Rydex Distributors, LLC (RDL). Security Global InvestorsSM is the investment advisory arm of Security Benefit Corporation (Security Benefit). Security Global Investors consists of Security Global Investors, LLC, Security Investors, LLC and Rydex Investments. Rydex Investments is the primary business name for Rydex Advisors, LLC and Rydex Advisors II, LLC. Security Global Investors and RDL are affiliates and subsidiaries of Security Benefit, which is wholly owned by Guggenheim SBC Holdings, LLC, a special purpose entity managed by Guggenheim Partners, LLC, a diversified financial services firm with more than $100 billion in assets under supervision.

©2010 Rydex SGI. All rights reserved.