Opinion

Changing the rules of the diversification game - a pensioner's tale

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For all the diversification talk between 2000 and 2008, why did all pensions, no matter their asset mix, seem to lose out equally?

By Susan Barreto

Diversification isn't what it used to be. The basic concept of diversification, the putting of money to work in as many asset classes as possible to dampen the overall portfolio risk, seems to have done a negligible job in saving pension funds from going broke.

But for all the diversification talk between 2000 and 2008, why did all pensions, no matter their asset mix, seem to lose out equally? Is diversification a pensioner's myth?

This is a question recently raised in Steven Drobny's book called The Invisible Hands - Hedge Funds Off the Record - Rethinking