Industry diversification in the domestic stock market when forming a private investor's portfolio
Lyubov' BorodavkoThis article examines industry diversification in the domestic stock market, which is the primary level of implementation of the overall strategy for diversifying instruments in an investment portfolio. The article examines the key principles of diversification as the most appropriate and effective strategy for building an investment portfolio. The returns of sector indices calculated by the Moscow Exchange are analyzed over various time periods. To determine the effectiveness of sector diversification, correlation matrices of sector indices are presented and analyzed over one-year, three-year, five-year, ten-year, and eighteen-year horizons. The most and least attractive sectors for investment portfolio diversification were identified. Conclusions were drawn about the increasing impact of sectoral diversification over long investment periods. To demonstrate the attitudes of domestic private investors toward choosing investment instruments from a diversification perspective, the structure of the Moscow Exchange's "People's Portfolio" analytical indicator is analyzed. The potential of exchange-traded funds for achieving diversification is explored.