The diversification score tells you how much extra risk a custom portfolio is taking compared to a comparable optimized portfolio. A 100% short-term bond portfolio has an extremely low level of risk and is the optimal portfolio at that low level of risk. Because 100% short-term bonds provides optimal return at that risk level, it is given a good diversification rating.
Articles in this section
- What is a Flexible Portfolio?
- How do I set up or adjust my Flexible Portfolio?
- Who might a Flexible Portfolio be appropriate for?
- What level of control does a Flexible Portfolio offer?
- If I use Flexible Portfolios, could my performance change?
- How will using Flexible Portfolios impact my fees?
- Which portfolio strategies can be adjusted with Flexible Portfolios?
- Why does my short-term bond portfolio have good diversification even though it’s only one asset class?
- Will using Flexible Portfolios impact my tax-savings features?
- Will my use of a Flexible Portfolio impact the advice I receive from Betterment?