Diversification
Plain-English definition
Spreading investments across different exposures to reduce dependence on one source of risk.
Why it matters
Many holdings may still share the same borrowers, property markets, or funding pressures.
Example
Ten hypothetical lenders exposed to the same stressed industry may be less diversified than their number suggests.
How income investors use it
Review common exposures across BDCs, equity REITs, and mortgage REITs. Diversification cannot eliminate loss.
This material is general education, not individualized investment, tax, or legal advice.