A colleague described a meeting with his financial planner. For years his savings had been scattered across several institutions, so he did the sensible-sounding thing and consolidated everything under one wealth management group to simplify his life. Two years after that consolidation — by then part of the CI Mavericks group — he put the question to his advisor directly: “Am I diversified?” The answer was the reassurance every client wants to hear: yes, comfortably so.

The evidence offered was straightforward. Roughly 40% of the portfolio sat in technology names — effectively the largest handful of stocks in the S&P 500. Another 40% or so was in international equities. Two baskets, maybe three. On the surface, that looks like diversification.

Look again. Nearly the entire portfolio lived inside the Western capital-market system. Within that system, it was concentrated in one market — public equities. And the whole of it was held through a single wealth manager. Three different concentrations stacked on top of one another, wearing the costume of diversification.

Diversification you can see on a pie chart is the easy kind. The concentration that matters most is the kind that doesn’t show up on the statement at all.
The Question Nobody Asks

Diversified Across What?

When most investors hear “diversification,” they think about asset class: stocks, bonds, precious metals, real estate. That axis matters, and it is where almost every conversation begins and ends. But it is only one axis. The one that quietly governs whether you actually own what you think you own is counterparty risk — and, more precisely, the diversification of counterparties.

A counterparty is anyone who stands between you and your asset: the government that issues your currency, the custodian that holds your shares, the brokerage that executes your trades, the bank that clears your cash. Every layer is a party whose solvency, honesty, and cooperation you are quietly depending on. Spread your holdings across ten tech stocks and you have diversified almost nothing on this axis — the same custodian, the same broker, the same market, the same system sits behind all ten.

The Layers

Who Really Stands Between You and Your Money

It is worth walking the chain deliberately, because most of it is invisible until something breaks.

i.
Cash — the government is your counterparty
Hold currency and you are trusting whichever government issued it to preserve its purchasing power. History is not kind on this point. The counterparty here is monetary policy itself.
ii.
Real estate — two counterparties hiding in plain sight
“I own my house.” Do you have a mortgage? Then a lender has a claim on it. Do you pay property tax? Then try not paying it and you will quickly learn who actually holds the ultimate claim on your land — and that a taxing jurisdiction can raise that levy whenever it chooses, entirely outside your control.
iii.
Public stock — a chain of hands you never see
Own a “liquid” Apple share and you are a minority shareholder with no control over the company. That share is held by a custodian — usually not your broker — whose solvency you depend on. And it clears through a brokerage whose conduct you depend on. Several sets of hands sit between you and that position.
iv.
The intermediary itself — the risk that actually bites
We have known investors who believed their Western-market equity portfolios were entirely secure — until the brokerage they used did something untoward with pooled assets, wound down, and left them unable to access their funds for a long stretch. Some recovered only after losing a double-digit share of their capital. The thesis on the stocks never changed. The counterparty failed.

None of this is an argument against owning equities. It is an argument for being honest about what you are actually exposed to. A statement showing fifteen positions can still represent a single point of failure.

The Other Side of the Ledger

What It Looks Like to Remove a Counterparty

Some assets collapse the chain rather than extend it. Physical precious metal held in your own possession has no counterparty — no issuer whose promise you are relying on, no custodian who can rehypothecate it, no intermediary who can freeze it. Gold has held real value across currency regimes for millennia precisely because it answers to no one’s balance sheet. That is not a price call. It is a structural property.

The same logic extends beyond metal. Ownership of a real, productive asset — held directly, through a company controlled by people you know and can look in the eye — sits outside the public-market machinery entirely. There is no custodian, no clearing broker, no anonymous pool. The counterparty is a known human being operating a real business, which is a fundamentally different risk than an invisible custodian three layers down a settlement chain.

Skin in the Game

How We Build for Counterparty Diversification

This is not a framework we hand to members and keep at arm’s length ourselves. It is the reason our own structure looks the way it does. When CI Mavericks talks about diversification, we mean it across all three axes — asset class, jurisdiction, and counterparty — and we deliberately weight toward hard assets owned outside the capital markets:

We are also evaluating a diversified treasury policy for the SPC’s reserve balances — the recognition that parking reserves entirely in a single sovereign’s short-dated paper is itself an undiversified currency position, and that physical gold’s absence of a counterparty is exactly what makes it useful in a reserve. That work is under review with our tax and Cayman counsel, and is diversification logic applied to the cash that sits behind the portfolio, not a bet on any metal or currency.

We don’t advise on assets we don’t hold, and we don’t consult on structures we haven’t underwritten ourselves. Counterparty diversification is not a slide in our deck — it is the shape of our own balance sheet.
A Working Checklist

Auditing Your Own Counterparty Map

The exercise is uncomfortable precisely because it usually reveals concentration where the statement showed diversity. A few questions worth sitting with:

Institutions: How many financial institutions actually hold your assets? If one wound down tomorrow, what share of your net worth is trapped or at risk?

Systems: What fraction of your wealth lives entirely inside one financial system — and could be affected by one system’s rules, freezes, or failures at once?

Custody chains: For your public-market holdings, do you know who the custodian is, and what happens to your position if that custodian — not the company you invested in — fails?

Counterparty-free assets: What do you hold that answers to no one — metal in your own possession, a directly owned productive asset — and is it a meaningful share, or a rounding error?

Banking: Are your operating and reserve relationships spread across more than one jurisdiction, or is your liquidity a single point of failure?

Real diversification is not about owning more things. It is about depending on fewer of the same people. Once you start counting counterparties instead of tickers, a lot of “diversified” portfolios look a great deal more concentrated than they did an hour ago — and that is exactly the point worth confronting before a market, and not a broker, forces the question for you.