Which investment is least likely impacted by systematic risk?

The investment least likely impacted by systematic risk is a diversified mutual fund. Systematic risk, also known as market risk, affects the entire market or a particular segment of the market, and it cannot be eliminated through diversification. However, a diversified mutual fund typically holds a wide variety of assets across different sectors and industries, which helps to spread out individual asset risk.

While it is true that a diversified mutual fund is still exposed to some level of systematic risk, its structure significantly mitigates the impact of this risk compared to less diversified investments. For instance, individual stocks are highly susceptible to market fluctuations, and corporate bonds can be affected by interest rate changes and economic downturns. Similarly, sector-specific index funds are focused on particular areas of the market, making them more vulnerable to sector-specific risks that are part of systematic risk.

Thus, while all investments bear some degree of systematic risk, the diversified mutual fund offers the most protection against this type of risk due to its inclusion of multiple exposure points across various investments, which helps buffer against market volatility.