Investing Insights Market Volatility: Portfolio Diversification Is Winning in 2025
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Jun 6, 2025 Amy Arnott, a portfolio strategist at Morningstar Inc. and co-author of the 2025 Diversification Landscape Report, dives into the resilience of the 60/40 portfolio amidst 2025's market volatility. She explores which asset classes are thriving and which ones are struggling, the growing interest in international stocks, and the rising yields on U.S. Treasuries. Arnott emphasizes the importance of diversifying strategies and adapting to macroeconomic changes, such as inflation, to optimize investment outcomes.
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Diversification Benefits in 2025
- Portfolio diversification has shown significant benefits during 2025's market volatility.
- Diversified portfolios have offered a net positive impact amidst uncertainty and tariff policy changes.
Strong Asset Classes in 2025
- Gold surged approximately 30% due to central bank buying and safe haven demand.
- International stocks and investment-grade bonds also performed well as diversifiers in 2025.
Struggles of U.S. Stocks and Bonds
- U.S. stocks, especially growth stocks, struggled and showed unusual correlation with treasury bonds.
- Treasury bonds, usually diversifiers, failed to provide expected negative correlation on some days.