Diversification is possibly the most enduring and fundamental principle of investing. Investing in a mix of different asset types, industries, geographies, and investment vehicles to limit exposure to any one investment and reduce the risk of substantial losses from a single market event acknowledges that financial markets are ever-evolving, influenced by a host of factors from geopolitical events to technological advancements. No single asset or sector is impervious to shifts, no matter how promising it may seem at a given moment.

Diversification is often likened to not putting all one’s eggs in a singl...