Diversified means at least 50 stocks

Growing share price volatility means portfolios need as many as 50 stocks to be truly diversified, according to Threadneedle. Richard Eats, communications director at the group, said the traditional textbook definition of achieving diversification via 25 stocks was no longer viable as individual equities become more volatile and less correlated with each other. He cited a study by Professor John Campbell of Harvard University which found that specific factors in the US in 1997 accounted for 76% of individual stock volatility and sector and market for only 24%. Eats suggested a number ...