In investment, diversification refers to sharing risk, minimizing risk or distributing risk. Investors can minimize the risk of investments by investing in a broader range of individual investments or investment vehicles.

The more diverse the investments, the lower the risk and, subsequently the lower the potential profits.

ETFs are one example of conventional diversification instruments.

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Expert Benjamin Manz
Benjamin Manz is CEO of moneyland.ch and an independent expert on banking and finance.