When considering what investments to include in an investor’s portfolio construction process, it’s important to consider their risk tolerance. A portfolio’s risk level not only depends on its individual securities but also how these securities interact with each other—hence portfolio diversification. The more asset classes in a portfolio, the more likely it is to reduce market volatility, but also potentially returns. Though a 60/40 portfolio enjoyed about 15% gains last year, the macroenvironment is different this year. With 2025 presenting economic and market uncertainty, portfolio diversification is ever critical to withstand any market condition.
Morningstar’s report on portfolio diversification analyzes the diversification benefits of adding different asset classes and styles to portfolios, the relationship between risk and diversification, historical considerations and long-term trends, strategies for building a diversified portfolio, and more.
Access the report to learn how the value of diversification can empower successful investing strategies to meet your investing goals.
