DIVERSIFICATION is a strategy that aims to maximize one’s return while minimizing losses by investing in different asset classes. The term “diworsification” was first used by the famed fund manager Peter Lynch in his book “One up on Wall Street.” It has since evolved to mean inefficient portfolio diversification.

A diversified investment portfolio is usually composed of various asset classes such as cash, stocks, bonds, and other investment vehicles. These instruments are diversified further by purchasing shares in different countries, industries, or companies.