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Defensive Investment Strategy Definition

Definition

The word defensive investment plan denotes the construction of a portfolio which tries to lessen the potential of losing key. On average, a bigger percentage of a defensive portfolio’s capital are allotted to fixed earnings volatility compared to stocks.

Explanation

A defensive plan would be just a portfolio allocation that’s prepared to stop trying high yields in exchange for lesser hazard. Such a portfolio is ideal for people who have very low risk tolerance scores. On average, a bigger proportion of this advantage ‘s funds will be allotted to fixed income securities, like bonds, and also a smaller percent allotted to stocks, such as common stocks. The main aim of a defensive investment plan could be that the preservation of funding.

As may be true for different plans, a defensive portfolio necessitates rebalancing to keep up the desirable asset allocation. The portfolio won’t merely comprise investment bonds of short and long duration, but in addition numerous large cap stocks. The full portfolio will likewise be dispersed across numerous businesses to decrease risk .