Protection through Diversification

The COVID-19 pandemic has rattled the market and put tremendous pressure on investors. VIA IV clients can be assured that they are protected through exceptionally diversified portfolios — which are invested in indexes around the globe. As a result, VIA IV clients are not exposed to the downturn of any specific company that permanently goes out of favor. When markets bounce, indices naturally follow. Single stocks don’t necessarily do the same.

That’s not the case for people who are not diversified. For example, an investor with all their money in restaurant stocks right now would not be a good place due to COVID-19 closures. Furthermore, when the economy recovers, those specific industries might not recover in the same way the overall market does.  

Some non-diversified investments are at risk of never rebounding — but when you own indexes, they come back when the market comes back. We like to call that protection through diversification. Among other things, diversification eliminates the risk of bankruptcy loss on the whole portfolio. Diversification also means that your investments aren’t only tied up in your company’s stock. For example, if you work for Google your personal capital is all in Google, therefore, you shouldn’t have all of your funds in Google stock , you should diversify away from your personal capital.

Anything can and does happen in the markets, and usually at the most inopportune times. That’s why we think the best protection is diversification combined with a proficiency in financial science. We always recommend that clients have some part of their portfolios in cash and fixed income to get through the inevitable “rainy days.” 

We’re not gamblers, we are stewards of our clients’ money. 

The most important thing anyone can do right now is to take care of their health and their families first. Protect yourself through good health care and good health practices as mandated by your local government. But after that, protect your financial life. Know that VIA IV relies on science and diversification for these unexpected events. When they do happen (and they will happen again, most likely for a different reason than now), the diversification of a global portfolio —along with cash and fixed income— will protect you and your capital. 

Jeff Holland | VIAIV

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