Does a Diversified Index Protect You?

The fear of large losses often clouds the perception of risk. Investors often misperceive concentrated portfolios as riskier due to the concern that a severe decline in a large holding will have a significant negative impact on portfolio returns. A historical analysis of Polen Capital’s Focus Growth Portfolio shows clearly that the frequency of large losses, both absolute and relative, has been far lower in the Portfolio when compared to the frequency of large losses in the S&P 500 Index.

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