Opinion | Manage risk in your portfolio or it will erode its value over the long term

Everything I knew and understood about risk and diversification changed in the last six months. Months of the rigorous tests and analyses my team and I did combined with discussions with leading academics and practitioners proved that managing the risk of your portfolio can significantly increase your portfolio’s value over time. Here’s the simple mathematics of it—a portfolio with reduced risk leads to smaller swings in portfolio value, which in turn leads to faster compounding of returns, making your portfolio value higher than that of a higher-risk portfolio.

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