Diversification
Investment Contest: Switzerland For Financial Literacy
Welcome back, dear Participants!
Milestone 3: Investment Strategies is officially live! This time around, you will learn all the fundamentals of building a diversified portfolio!
Our esteemed Jury Member, Florence Schnydrig, brings her invaluable expertise to guide us through this milestone. Get ready to elevate your investment strategies and navigate the realm of financial instruments under Florence's expert guidance.
What is diversification?
Diversification stands as one of the fundamental principles in investing. To diversify a portfolio means investing in different industries, geographies, currencies, etc. rather than putting all your eggs in one basket.
Florence Schnydrig, a member of the Executive Board at the Zürcher Kantonalbank and head of Private Banking, can look back on a long career in the banking industry. Today she tells us what diversification means to her and why it is one of the most important concepts in banking.
How does Florence diversify her portfolio?
Florence's private portfolio is constructed based on a core-satellite approach, broadly diversified and set towards long-term capital growth:
Core: As the main building block of her portfolio, Florence invests in a discretionary investment mandate that invests in various asset classes such as equities, bonds, real estate, and commodities as well as in geographical regions and industries.
Satellite: In addition, Florence has invested a smaller part of her investment portfolio in individual private equity and thematic funds such as robotics to benefit from certain long-term trends.
The chosen solution create 4 key benefits for Florence:
Minimal time investment through delegation.
Leveraging the expertise of investment professionals.
Minimizing risks through diversification.
Real growth in value, i.e., after inflation, over a long period of time.
What are the criteria for the main prize?
The Zürcher Kantonalbank is the generous sponsor of one of our main prizes: A fund portfolio worth CHF 10,000 at the Zürcher Kantonalbank including consultation!
You can find the criteria that Florence considers when choosing the winner for the prize here:
Concentration risks: A well-diversified portfolio avoids concentrations in individual equities or cryptocurrencies, i.e., the greater the proportion of e.g., funds in the portfolio, the better the diversification.
Efficiency: The ratio of portfolio returns to risk taken is an indicator of portfolio efficiency and therefore an indication of the diversification of a portfolio.
Geographies: Predicting the future returns of individual countries is challenging. A successful long-term portfolio should therefore be invested in several countries/regions.
Sectors: While one sector might be benefiting from a lot of support (e.g., currently technology) other sectors might suffer. A diversified portfolio should therefore be invested in different sectors to minimize dependencies.
Financial literacy: Completing training nuggets in the area of diversification also has a positive impact on your overall rating.
We wish all of our participants the very best of luck. May the best portfolio win!
If you have any further questions about the price, please don’t hesitate to contact us at contest@umushroom.com.
