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How Did Diversified Portfolios Hold Up in 2023? 

Uncover the factors behind the resurgence of the 60/40 portfolio.  

Diversification has often been called the “only free lunch” in investing. However, in 2023 a standard 60/40 portfolio outperformed more broadly diversified portfolios, marking a shift from 2022 trends.

In this annual report, we explore the factors that led to this reversal and discuss the potential implications and future of portfolio diversification. Despite the recent performance trends, diversification remains a fundamental principle for risk management in investment portfolios. The unpredictability of markets, influenced by geopolitical events, economic policies, and technological advancements, underscores the importance of maintaining a well-rounded investment approach.

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What's Inside our Research:

  • Insights into the performance of diversified portfolios compared to a basic 60/40 portfolio in the 2023 market.
  • Analysis on correlations between the U.S. and other markets around the world and why international diversification has been challenging to implement.
  • Discussion of how asset-class correlations have shifted during periods of rising interest rates, high inflation, and economic slowdowns.
  • Evaluation of the diversification potential for 12 major asset classes and their role in portfolio diversification in periods of market stress. 

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