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Mr. Kolluri suggested that average investors would be "better to stick with a fund" for diversification, diluting the credit risk of any individual company.
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Still others, she said, may have clients who want the Pacific fund only for diversification, because they already own a portfolio of European stocks.
Or perhaps investing could have been done through funds that allow for diversification.
Trading in the largest stocks of the Nasdaq index may be more volatile before the rebalancing takes effect, but the change may make index funds that are based on the Nasdaq more appropriate for lay investors, said John DiBacco, global head of equity finance at UBS. "When you buy an index fund you are hoping for diversification," he said.
Lydon recommends investors put the core of their funds in an ETF for diversification and then if they like stock picking, they can use the remainder to do that.
The concept release asks how a fund should value a derivative to determine the percentage of the fund's assets that's invested in a particular company for diversification purposes.
Many investors get into ETFs for diversification because these exchange-traded funds allow you to spread your money around a certain index or sector.
Many have converted into limited companies, to raise funds for expansion and diversification.
Can you provide a recommendation for an Investment Policy for my firm that focuses on low fund expenses, diversification and long-term investment performance?
Mutual funds are usually a good bet to fit the bill for diversification, but you generally have to buy a few to achieve good diversification of your holdings.
But if investors were more interested in commodities for diversification purposes, he preferred low-cost natural resources funds.
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