Which of the following accurately describes the goal of diversification in variable annuities?

The goal of diversification in variable annuities is accurately described as balancing risk across different investments. Diversification involves spreading investments across a variety of asset classes, sectors, or geographic regions to reduce the overall risk of the portfolio. By not putting all funds into a single asset or closely correlated assets, investors can mitigate the risk that comes from any one investment declining in value.

Each asset in a diversified portfolio may perform differently under various market conditions, which can help smooth out returns and protect against significant losses. This strategy is particularly important in variable annuities, where the investment's performance can directly impact the value of the annuity.

In contrast, investing all funds in a single asset would increase risk instead of diversifying it. Similarly, maximizing risks across the portfolio or focusing solely on ensuring high returns without regard to risk would contradict the fundamental principles of prudent investment management. Diversification aims to create a more stable investment approach while still allowing for growth potential through varied investment opportunities.