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Library · Article

Portfolio diversification: What it means and why it matters

By Prudential · Published May 20, 2026

Portfolio diversification is the practice of spreading investments across different asset classes, sectors, and geographic regions to help manage risk and reduce reliance on any single investment or market outcome. Because different investments often respond differently to economic conditions and market events, diversification can help cushion the impact of losses in one area with stability or gains in another, creating a more balanced investing experience over time. A well-diversified portfolio

Portfolio diversification: What it means and why it matters
Originally published on prudential.com

Portfolio diversification: What it means and why it matters

Portfolio diversification is the practice of spreading investments across different asset classes, sectors, and geographic regions to help manage risk and reduce reliance on any single investment or market outcome. Because different investments often respond differently to economic conditions and market events, diversification can help cushion the impact of losses in one area with stability or gains in another, creating a more balanced investing experience over time. A well-diversified portfolio

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