Rethink diversification
Diversification is about better outcomes, not just lower risk. Markets have changed and the traditional 60/40 stock-bond portfolio may not work the way it did.
Drawing returns from more places can smoothen your investment journey, reduce reliance on a few big names and support more consistent income as conditions change.
Drawing returns from more places can smoothen your investment journey, reduce reliance on a few big names and support more consistent income as conditions change.
Key Points
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Traditional diversifiers are less dependable
Stocks and bonds don’t always offset each other like they used to. Broadening your toolkit beyond traditional diversifiers may help reduce reliance on any single source of stability.
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Concentration makes diversification harder
Markets are increasingly driven by a few powerful forces. What looks diversified can still move as one — making it important to seek more independent return drivers.
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Markets move fast – portfolios need to keep up
Shocks and the gap between winners and laggards are more common today. Layering diversifiers and being flexible may help your portfolio stay resilient as conditions shift.
Spotlight: Why Asia deserves a bigger role in portfolios
When markets don’t move in sync, looking beyond familiar markets may make a meaningful difference. Asia brings a wide mix of opportunities that can help you navigate today’s increasingly fragmented markets.
A region that doesn’t move in lockstep
Asia follows its own economic and policy paths, shaped by local growth and domestic demand. That difference may help bring balance to portfolios when global markets move together.
Asian credit: Income from different drivers
Less tied to U.S. rates, Asian credit is backed by lower debt levels and a strong mix of high-quality issuers. Including non-USD bonds also broadens income sources, strengthening diversification.
Asian equities: Dispersion and paths to growth
Asia’s breadth and diversity offer many paths to growth, not just a few big names. Wider dispersion across countries, sectors and stages of development creates more opportunities,
When diversification matters most, choosing the right partner counts
Trusted by investors around the world, BlackRock seeks to bring global insight and practical solutions to help diversification work harder for you.
Insights to help you rethink diversification
The big question that clients in Asia Pacific are asking me today is, “Is there a smarter way to diversify in this market?”
Hi, I'm Jeff Shen, Co-CIO and Co-Head of the Systematic Active Equity team here at BlackRock.
In recent years, we've seen equity and bond correlations rise and fail to deliver the diversification needed in a traditional 60/40 portfolio. As we face more economic and market uncertainty, we think there is a smarter way to build a more resilient portfolio by adding alternative strategies.
Alternative strategies like market neutral, absolute return strategies are made for times like these for two key reasons. First, they aim to deliver positive returns regardless of how the market is performing. Next, they often aim to have near-zero correlation to broader equity markets.
As a result, these strategies may offer investors a differentiated source of return, which in turn could be additive to overall portfolio diversification.
Within the BlackRock Systematic team, we carefully manage our portfolios to have a low correlation to traditional asset classes such as equities, bonds and commodities.
Our unique systematic approach utilizes the combined strengths of cutting-edge technology, the power of big data, and human intellect to uncover opportunities across thousands of stocks, allowing us to effectively navigate volatility.
Is there a smarter way to diversify in today’s market?
Jeff Shen shares how alternative strategies, backed by our systematic approach, may offer investors a differentiated source of return and portfolio resilience.
Hi, I'm Daniel Caderas. I'm a multi-asset investor, and I lead the Global Tactical Asset Allocation team here at BlackRock.
The big question that our clients in Asia Pacific are asking us today is how do I prepare my portfolio in a robust and resilient manner so that the portfolio is ready to maneuver and navigate today's fast changing markets?
What worked in the past potentially, where you just combine stocks and bonds in a portfolio and they're largely offset by each other, in particular, during periods of stress and volatility. Those times are gone.
We believe as an investor these days you want to be flexible, you want to be nimble.
You also want to incorporate the fact that the world is changing fast, and you want to have a more short-term view.
We are a team which invests in a more tactical manner, which means we focus on the short-term to mid-term time horizon. We do this across a large opportunity set.
And that allows us to be flexible in terms of go anywhere. So wherever we believe there's dislocations, discrepancies, wherever the market tends to overreact or underreact, that's where we can position ourselves.
How do I build a resilient multi-asset portfolio?
Daniel Caderas shares what it takes to build a robust portfolio today amidst changing and complex markets.
Frequently asked questions
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Markets have changed. Stocks and bonds now move together more often, which means investors may need additional sources of diversification to achieve smoother outcomes.
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It means adding investments that behave differently from traditional markets. This can include assets like liquid alternatives, gold, themes or regional strategies – so returns don’t rely on a single market or outcome.
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Not anymore. Many liquid alternative strategies are now designed to be accessed more easily and used alongside traditional investments, helping everyday investors diversify portfolios without locking up capital.
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Gold draws on different drivers than shares and bonds, which can make it useful during periods of inflation, uncertainty or market stress. Some investors also use gold equities for added growth potential alongside diversification.
