The idea that you can get something for nothing is almost inconceivable for an economist. At least it was, until Nobel Prize-winning economist, Harry Markowitz, demonstrated that a diversified portfolio could offer improved performance and reduced risk relative to individual asset classes. He famously called diversification “the only ‘free lunch’ in finance.”

When people think they’re diversified, they often mean they own a range of stocks. But real diversification is about spreading risk across asset classes, not just within them.

It means incorporating instruments such as bonds, cash, shares, funds, property, and alternatives – each with unique behaviours, costs, tax profiles, and volatility – into a portfolio tailored to your goals and time horizon.

Diversification also demands regular recalibration. A portfolio suited to someone in their thirties with a high-risk appetite will likely look very different from that of someone nearing retirement. This means that we also have to keep checking in on what diversification means to you and your personal financial plan.

At SFP, we create globally benchmarked strategies that help you stay invested, stay balanced, and stay on track. Our team is ready to help you and engage with any questions you might have.