What is the main objective of the diversified portfolio structure of a UITF?

The main objective of the diversified portfolio structure of a UITF is to achieve optimal asset allocation for risk management. By diversifying investments across various asset classes, sectors, and geographies, a UITF aims to spread out risk and reduce the impact of any single investment’s poor performance on the overall portfolio. This strategic allocation allows for more balanced risk exposure, making it a crucial element of the investment strategy.

The diversification helps ensure that while some assets may underperform, others may perform well, creating a more stable return profile over time. This is particularly important in volatile markets, where asset prices can fluctuate significantly. A well-diversified UITF can potentially enhance returns while mitigating risk, aligning the fund manager's objectives with the investors' need for stability and growth.

Focusing solely on maximizing returns through high risks, providing varied investment options, or concentrating on specific high-growth sectors may not adequately address risk management concerns. Without a diversified approach, investors could face greater volatility and potential losses, undermining the primary objective of achieving a balanced and stable investment performance.