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Diversification Never Goes Out of Favor

Instead of trying to “chase” performance by investing in what has performed well recently, work with a trusted financial advisor to build a diversified portfolio.

Client Conversations gives financial advisors an easy way to communicate with clients on topics influencing financial markets; it highlights common investor behaviors and offers ways to address the challenges investors face. Share this article with your clients, and remember to follow your firm's policies that govern sharing content with clients and prospects.

Client Conversations gives financial advisors an easy way to communicate with clients on topics influencing financial markets; it highlights common investor behaviors and offers ways to address the challenges investors face. Share this article with your clients, and remember to follow your firm's policies that govern sharing content with clients and prospects.



History shows that asset classes move in and out of favor over time. Instead of trying to “chase” performance by investing in what has performed well recently, work with a trusted financial advisor to build a diversified portfolio. Keep in mind that diversification doesn’t ensure a profit or protect against a loss.

 

Annual Returns (in Percentages) of Asset Classes 

For periods 12/31/03—12/31/18

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PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. Indices are unmanaged and not available for direct investment, and do not represent the performance of a single fund or any of the Hartford Funds. ■ Large-Cap Growth Stocks and ■ Large-Cap Value Stocks are represented by the Russell 1000 Growth and Russell 1000 Value indices, respectively, which are designed to differentiate between fast-growing companies and slower-growing or undervalued companies in the Russell 3000 Index. ■ Mid-Cap Stocks are represented by the Russell Midcap Index, which measures the performance of the mid-cap segment of the U.S. equity universe. ■ Small-Cap Stocks are represented by the Russell 2000 Index, which measures the performance of the small-cap segment of the U.S. equity universe. Small-cap stocks involve greater risks due to their smaller size and lesser liquidity. ■ International Stocks are represented by the MSCI EAFE Index, a free float-adjusted market-capitalization index that is designed to measure the equity market performance of developed countries outside of North America. ■ Emerging Markets Stocks are represented by the MSCI Emerging Markets Index, which is a free-float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. ■ Short Duration Bonds are represented by the Bloomberg Barclays 1-3 Gov’t/Credit index, which is composed of the Bloomberg Barclays Government and Corporate Bond indexes, including U.S. government Treasury and agency securities as well as corporate and Yankee bonds, with maturities between 1 and 5 years. ■ Long Duration Bonds are represented by the Bloomberg Barclays U.S. Long Gov’t/Credit Index, which includes all bonds covered by the Bloomberg Barclays Gov't./Corp. Bond Index with maturities of 10 years or longer. ■ Bank Loans are represented the Credit Suisse Leveraged Loan Index, which is a representative index of tradeable senior secured U.S. dollar-denominated non-investment grade loans. ■ Government Bonds are represented by the Bloomberg Barclays US Government Bond Index, which is made up of the US Treasury and US Agency Bond indices, as well as the 1-3 Year Government Index and the 20+ Year Treasury Index. ■ Corporate Bonds are represented by the Bloomberg Barclays US Corporate Investment Grade Index, which is comprised of publicly issued U.S. corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity, and quality requirements. ■ Cash Investments are represented by the Bank of America Merrill Lynch U.S. Treasury Bill Index (0-3 Months). Three-month Treasury Bills are short-term securities issued by the U.S. government that are generally considered to be risk-free. ■ Global Government Bonds are represented by the FTSE World Government Bond Index, which is composed of 14 world government bond markets with maturities of at least one year. ■ Commodities are represented by the S&P Goldman Sachs Commodities Index, which is comprised of the principal physical commodities that are the subject of active, liquid futures markets. ■ TIPS (Treasury Inflation Protected Securities) are represented by the Bloomberg Barclays U.S. TIPS Index, which represents securities that protect against adverse inflation and provide a minimum level of real returns. □ Diversified Portfolio is represented by an equal portion (6.7%) of each.

Data Source: Morningstar, Inc., 1/19.

 

Talk to your financial advisor today about diversifying your equity portfolio





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