Tag: Investment

Diversify The Investment Portfolio And Domestic Financial Market

Diversify The Investment Portfolio And Domestic Financial Market; Diversify the investment portfolio investment strategy aims to reduce risk by combining a variety of investments, such as stocks, bonds, real estate and other asset classes, as well as geographical diversification of investment. And requires good management of the investment portfolio of the risks of Guaranteed Money System Scam investing in the assets and avoid measuring the direction of price movement in the assets of the portfolio was negative in the same direction accuracy.

And diversification of the investment portfolio is happening at two levels: the first asset allocation, and at this level is the distribution of the funds invested on a number of major asset classes (stocks, bonds, etc.).



The second investment distribution of the different investment options within a particular asset class, such as the distribution of the shares allocated to the various sectors of the investment. The aim of this diversification is to reduce risk in the investment portfolio. It is often volatility in the value of the portfolio is limited due to the lack of the possibility that all asset classes, or the performance of companies in different industrial sectors in the value price is moving at the same time or the same rate. And reduces the diversification of the pace of all of the ups and potential landing and allows more performance in line with the different situations of economic conditions, and may help diversify investors to balance and diversify the risk in their portfolios process, and can diversify the investment also includes a time scale of investments, which is supposed to conform with the investor’s objectives and the need for liquidity, such as short-term investments, medium-term and long-term.

But the global financial crisis showed that the diversification of investment portfolios had a limited impact, as any investor (individuals or institutional investors) investment type to include categories of assets investment variety, or invested in mutual funds, have suffered financial assets invested in the same drop any indication speed of the shares, contrary to what was many wealth management and investment managers believe that the investment categories were not much related to each other, and that investing in a diversified investment categories will reduce the risks. But, it may be appropriate to say that what happened was not able to diversify investments in the portfolio of investment protection can be interpreted that the global financial crisis, described as the worst crisis since World War II, has been long negative impact all economies and global financial markets, and greatly influenced the low investor confidence.

As for investment diversification of investment portfolios and the availability of investment tools and models required in our local market, despite the availability of some of those tools, but they are not commensurate with the size of the economy and financial market of the kingdom, where he represented in 2008 the Saudi economy of 17 per cent of the economic size of the area Middle East, and accounted for 43.7 per cent of the economic size of the Gulf cooperation Council (GCC). As for the size of the financial market represents 34 per cent of the size of the financial market for the Middle East, and accounted for 44.9 per cent of the GCC financial market size.

And thus may be useful to some vital additions made in the construction of the financial market framework commensurate with the size of the local economy and its position in the map of the economies of emerging countries, and provide a variety of investment options for domestic investor allows the possibility of building a diversified investment portfolio includes all investment asset classes, and most important: First, the availability of investment channels investment offers in different asset classes, because the investment opportunities for domestic investors with weak investment channels, and the limited opportunities for diversification in the portfolio investment to the investor in the investment asset classes, and the high cost associated willing to diversify their investment portfolio to invest in different asset classes. for example, despite there are some real estate investment trusts, but they often may target a certain segment of investors by setting the minimum subscription, and all real estate investment trusts available do not provide investment real estate a long-term oriented to own real estate assets could during which the investor to benefit from growth in the real estate asset values ​​over time with getting a regular income returns, in addition to that there is a real estate investment fund or non-real estate investment available through the trading units.

Second: The availability of the option of investing in government bonds, companies of all categories of investors (institutions / individuals) of strategic importance, an important part of the diversification of the investment portfolio choices, and therefore perhaps the presence of the depth of highly liquid government bonds and corporate market, and the existence of versions of government bonds for periods of different maturities, and the development of standard Reference interest rate Benchmark, as a tool to measure the financial return and the amount of risk than investing in bonds, yield curve yield curve represents the most important foundations of the financial market building.

Third, the financial market need to be some important instruments such as short-selling, and trading option contracts Options for the shares, and other tools, and so for its those tools of possibility and guarantees for money investor insurance, and create a balance and another dimension to the market. As well as the inclusion of some of the indicators for circulation to enable the investor to invest in them instead of several companies. And the availability of dual-listing of some companies from the regional markets. For example, the inclusion of CFD Society Scam companies or regional trading in the local market allows the investor the possibility of diversifying the investment portfolio at a lower cost with no exposure to the issue of the cost of changing the currency.


Although some believe that the diversification of the portfolio investment can be deducted seeking to obtain maximum returns of those who favored a high degree of risk, because it is mostly the investments allocated to different sectors and classes with different performance of assets, and therefore affects With different performance, and thus affect the overall performance of the investment portfolio, so I believe that diversification friend to those who wish to preserve the wealth with achieving some of the returns may not be high. Thus, it is likely that the global financial crisis, and losses resulting from fear and instability of financial markets means that many investors are looking to wealth preservation rather than maximizing revenue. The investment diversification helps to meet these goals, and perhaps the decline in investor confidence in financial markets supports the return of this kind of investment styles.