👉 A portfolio weapon, also known as a core portfolio or central weapon in a diversified investment strategy, refers to a specific set of highly correlated assets that collectively form the backbone of an investor's portfolio. These assets are typically chosen for their low correlation to one another and the broader market, ensuring that they perform similarly under various market conditions. By concentrating investments in a few key assets, investors can achieve a balance between risk and return, as these assets often have similar risk profiles. The portfolio weapon acts as a stabilizing force, providing consistent returns and reducing overall portfolio volatility. This approach is particularly useful for long-term investors seeking to minimize risk while maintaining a steady income stream or capital appreciation.
