May 31, 2009

Foreign currency trading – Yet "scatteration," diversification carried too far, is as much a defect in investment policy as is insufficient diversification.

By and large, American investment companies have done a better job than the British in this respect. Managers in this country have rejected the notion that there is great value merely in multiplying the number of securities held. Rather, they have sought to combine reasonable participation in a representative number of securities with selectivity. It might be said that American investment companies have recognized that diversification requires both breadth and depth. British companies that are smaller than their American counterparts often have three to four times as many individual securities in their portfolios. To have between five and six hundred securities in a fund of $20 million seems to be scatteration, an expression of timidity or of effort to escape from the responsibilities of management.

Foreign currency trading – Yet "scatteration," diversification carried too far, is as much a defect in investment policy as is insufficient diversification.

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