Start with the risks you already hold
An investor with several mortgage investments may have diversification between borrowers, but still have substantial exposure to property values and the availability of refinancing. Those are useful distinctions when deciding what the next investment should add.
Look through the product label
A broader portfolio might combine credit with listed investments, property ownership, private businesses and cash. The value of the combination depends on the underlying exposures, costs, holding periods and risks rather than the number of product labels.
Liquidity has a role of its own
Liquidity deserves its own place in the discussion. A diversified collection of illiquid assets may still leave an investor unable to fund an unexpected need. Portfolio design should consider both what assets might earn and when capital may be available.
Questions for the next allocation
Before selecting a new strategy, ask what it adds, which existing risks it repeats and what assumptions support its exit. Those questions make diversification a practical decision.
- Identify shared economic risks rather than counting products.
- Consider the interaction between liquid and private assets.
- Ask what a new allocation changes in the existing portfolio.
This perspective is general information. Consider the relevant documents and your circumstances before making an investment or finance decision.