Why More Diversification Doesn’t Mean Better Returns

Plus, the best and worst bond diversifiers, and where cash fits in a portfolio.
Amy Arnott, portfolio strategist for Morningstar Inc, discusses why the classic 60/40 investment strategy beat a more diversified portfolio in 2023, and the positive that can come from interest-rate pivots.
00:41 The Benefits of Portfolio Diversification
02:41 How Does the 60/40 Portfolio Hold Up Against a Portfolio with More Asset Classes?
03:54 Why the Well-Diversified Portfolio Struggled in 2023
04:50 Is it Worth it to Invest Beyond the 60/40 Portfolio?
05:57 Why Interest Rate Pivots Are Painful and Encouraging
08:21 Is There an Interest Rate Pivot Right Now?
08:51 Do Bonds Still Provide a Diversification Benefit?
09:52 Which Bonds are the Best Portfolio Diversifiers?
10:57 The Role of Cash in an Investment Portfolio
12:02 Key Takeaways
Read about topics from this episode.
How Did Diversified Portfolios Hold Up in 2023? www.morningsta...
Why Simpler Has Been Better for Portfolio Diversification www.morningsta...
How Rising Interest Rates Change the Relationship Between Stocks and Bonds www.morningsta...
Which Bonds Provide the Biggest Diversification Benefit? www.morningsta...
Top 10 Things to Know About Building a Diversified Portfolio www.morningsta...
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Amy Arnott www.morningsta...
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[@TheinTunZaw-uj1un]

The main reason of diversification is to adjust risk, imo

[@DarkBullCapital]

well explained, tnx for the insight.