One of the best-established methods of risk management in investing is diversification. The concept is simple: holding only one share in your portfolio makes you directly susceptible to its price changes. If its price plummets, so does your entire portfolio. Hold two shares instead and, unless they both plummet, the portfolio is still afloat. The key to diversification is the age old adage; don't put all of your eggs in one basket. The main point of diversification is to reduce risk rather than improve expected return. 

Magus uses the worldwide funds of various institutions. For example we use Dimensional Fund Advisors, because they help us diversify not only in the amount of shares held (thousands) in our portfolios, but also the range of capital market strategies they explore and develop. In this way, our portfolios include factors that drive investment returns, and reduce excess and undesirable risk.

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