Final answer:
To diversify portfolio risks, individual savers often turn to investment banks or hedge funds, as they offer services aimed at investment diversification beyond standard banking products.
Step-by-step explanation:
Diversifying Portfolio Risks through Financial Institutions
When looking to diversify one's portfolio risks, various financial institutions offer different services. Among the options available:
- Commercial banks offer a range of accounts including checking, savings, and certificates of deposit which are insured by the FDIC.
- Credit unions are member-owned institutions that usually offer similar services to banks but may have more favorable rates or fees due to their not-for-profit status.
- Investment banks specialize in services such as underwriting, acting as intermediaries between issuers of securities and the investing public, and providing strategic advisory services for mergers, acquisitions, and other types of financial transactions.
- Hedge funds are pools of investments that use a variety of strategies to earn active returns for their investors, typically requiring a higher minimum investment and involve higher risks.
To diversify portfolio risks effectively, individual savers would best be served by investment banks or hedge funds, as these institutions are geared towards investments and can provide avenues for diversification through the pooling of various types of assets and investment strategies.