Spread the dependence on individual investments
The FCA describes diversification as holding different kinds of investments across markets rather than relying on one investment to do well. It can reduce the effect of an individual investment performing badly, but cannot remove all risk.
The useful question is what the investments depend on. This guide explains the concept without suggesting a set of funds, percentages or a portfolio for you.
Sources: FCA: Diversification
One fund can contain many investments
The FCA explains that funds pool investors’ money. A fund may hold shares within one country, shares across countries, bonds or a mixture of asset types. Different fund names are not enough information to understand that mix.
When collecting your documents, retain the fund description with its date. If two descriptions mention similar holdings, note a question about overlap. Do not infer that adding another name necessarily adds a different source of risk.
Sources: FCA: Diversification
Ask for the underlying description
Prepare a short document list rather than inventing a diversification score. Start with the provider’s current description, the fund’s stated scope and any information you do not understand. Keep the original wording available for an administrator or adviser.
For example, an unresolved question could be whether two named funds cover similar markets. That is a request for explanation, not an instruction to sell either fund. All Pensions does not inspect your holdings or calculate their exposure.
- Which documents describe the underlying holdings?
- Do the descriptions leave questions about concentration or overlap?
- Who can explain the terms or assess an individual change?
Sources: FCA: Diversification
Diversification is not a guarantee
The FCA cautions that diversification cannot eliminate risk and may not pay off in the short term. Investments can fall as well as rise; past performance does not predict future returns.
Use the risk guide to keep those limits visible. None of the linked tools measures diversification, determines a suitable allocation or forecasts what a combination of funds will earn.
Sources: FCA: Diversification
Sources & review
- FCA: DiversificationChecked 2026-10-04
Next scheduled review: 2027-01-04. Provider details can change sooner. Use the official website for the current contact route.
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