The Value of Diversification

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What is this chart showing?

This chart shows return, volatility, and risk-adjusted return statistics for four hypothetical portfolio mixes.

Why is it important?

Diversification, or investing in a variety of assets such as stocks and bonds, has historically helped reduce the overall risk of a portfolio and improve risk-adjusted returns over time.

Source: Morningstar. Equity represented by the S&P 500 Total Return Index. Fixed Income represented by the Bloomberg U.S. Aggregate Bond Index. Data is from January 1976 to December 2022.