Recent fluctuations in global stock market prices underline the value of a diversified portfolio, it has been claimed.

Trevor Greetham, director of asset allocation at investments specialist Fidelity International, has made the comments in the week that the Shanghai Stock Exchange composite index dropped 8.8 per cent in a single day on Tuesday, February 27th 2007.

This fall, the largest recorded in the Asian country since 1997, is widely believed to have prompted a drop in confidence around the globe, with the FTSE 100 and Dow Jones industrial average both adversely affected.

And Mr Greetham explained what shareholders should have learnt with regards to protecting their investments in future.

Recent events pose a stark reminder that diversification has never been more important, he said.

Long-term investors looking for smoother returns and a spread of risk should diversify their exposure across a range of asset classes.

On Tuesday, the FTSE 100 index fell by a sum total of 2.31 per cent to 6,286.10.

The FTSE 250 also suffered as it recorded a 3.72 per cent drop to 11,180.90 during the trading day.