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Risk Controlled Portfolios

Portfolio Diversification

A very real challenge in portfolio construction is having adequate diversification within each sector of the equity market. The smallest of the major categories – the S&P 500 – contains 500 companies, and the Russell 3000 contains six times as many.

Even leaving aside the question of stock selection – which is certainly key to successful investing – the ability to own a representative portion of each sector is important in order to capture the returns of that market sector. Owning a larger basket of companies also helps to limit portfolio risk as returns are less dependent on the fortunes of any one holding.

Mutual funds provide a practical way for a prudent investor to buy an adequate amount of diversity. They also have the added advantage of being transparent as to their expenses, returns and historical performance.

By focusing on managers with low risk relative to their return, low expenses, and a consistent investment style, PMA harnesses their expertise, imbedded research, and analysis to create portfolio diversification that is balanced while controlling risk and expense, and producing long-term dependable results.