The Financial Pipeline hit a major milestone in 2016, marking 20 years of providing timely and helpful financial stories to help “the rest of us” cut through the clutter. Bob Swan, a vice president at Canso Investment Counsel, was one of the original contributors to the site. He told Financial Pipeline co-editor Malcolm Morrison that although investors have a huge menu of investment options, they are Still finding it more difficult to properly diversify their portfolios.
BS: Everyone is familiar with losing mammal and plant species and I would assert that we’re also losing financial market diversity. Now that might seem like a strange claim because we have this plethora of products. But the important feature among a huge number of these products is that they are going to prove to be highly correlated. And they’re going to be correlated to some big driver of investment markets…probably increasing interest rates at some point. So you’re going to see things that in theory should be diverse, acting very much the same. So it’s becoming a lot more difficult to diversify a portfolio.