"Diversified conviction" is one of the three principles we describe on our homepage, and it's worth being precise about what it does and doesn't mean, because the two words are pulling in slightly different directions on purpose.
Diversification, in the conventional sense, is a risk-management tool: spread capital widely enough and no single loss can sink the portfolio. Taken to its extreme, though, pure diversification becomes indifference — a portfolio so spread out that no one part of it is understood deeply enough to be managed well. That's not what we mean by it.
“We'd rather hold real conviction in eleven areas than superficial exposure to fifty.”
Conviction, on the other hand, usually implies concentration: you back what you understand best, and you back it heavily. Taken to its extreme, conviction becomes concentration risk — real returns, until the one sector you're concentrated in has a bad decade.
Eleven sectors is our answer to holding both at once. It's diversified enough that no single sector's cycle — a downturn in tourism, a regulatory shift in energy, a slow year in agriculture — determines the outcome for the whole portfolio. But it isn't diversification for its own sake: every sector on that list is one we've built a genuine, specific investment thesis for, with its own process for sourcing, underwriting, and supporting the businesses in it. We'd rather hold real conviction in eleven areas than superficial exposure to fifty.
The test we apply, in practice, is whether we could explain — specifically, not generically — why a given sector belongs in the portfolio and what we're looking for within it. If the answer is a paragraph of specifics, it qualifies. If the answer is "it's growing," it doesn't. Every sector page on this site is, in effect, our answer to that test made public.