Building a diversified portfolio in Saxo

When you build a portfolio, it's normal to invest in what you know best - a few tech names you like or familiar stocks from your home market. But while that might give you a portfolio that feels comfortable, it's far from bullet-proof. Why? Because it lacks one key-element: diversification.

Why you should diversify your portfolio

When you diversify your portfolio, you’re spreading your money across different investments. That means your total investment nest egg isn’t weighted too heavily in one thing – so, if your favorite tech stocks suddenly get volatile or your home market takes a dramatic downturn, your portfolio as a whole won’t be so vulnerable.

Less risk is just one benefit of diversifying your portfolio. Casting your investing net wider – across the globe if possible – also means you’ll be able to catch more opportunities in the financial markets.

Remember the skyrocketing Chinese stock markets in 2014-15? Or the Tesla rally in 2020? By flexing your investing muscles and adding a variety of assets, you’ll not only keep your portfolio more balanced, you’ll also be better placed to find new opportunities around the globe.

Holding a well-diversified portfolio does usually also lead to less volatile returns. With only a few investments, your portfolio performance is likely to differ significantly from year to year, while a broader range of investments tends to generate a smoother return development.

How to build a diversified portfolio at Saxo

If you want to start building a diversified portfolio, you should consider holding a mix of various asset classes like stocks and bonds. You can either invest in single instruments or use ETFs and funds to gain broad exposure with just one or a few products. Here's our take on how to create a plan to get started.

In order to find the products, you want to invest in, you can use the screener function on SaxoTraderGo to find individual investments based on filters such as sector, region or ESG rating.

Another way to build a diversified portfolio is to apply a thematic investment approach, where you start picking a few investment themes, or long-term market trends, you believe in. In SaxoTraderGO and SaxoInvestor, you can find long-term investment themes, which are handpicked for their future upside potential. The themes range from sustainability to digitalisation and come with inspirational investment lists.