Diversification: It's Not Always Easy to Do the Right Thing

June 1, 2017

Many investors want to buy last year’s winner; in the short-term, this strategy sometimes works well. But over time, the diversified portfolio tends to
outperform

Diversification is a time-tested method of portfolio construction that reduces risk (standard deviation) and delivers more
consistent returns, but what it doesn’t do is make headlines by delivering attention grabbing performance. Accordingly, investors are often disappointed when they compare the results of a diversified portfolio with the results of a single index.

However, over time, the diversified portfolio tends to outperform despite consistently falling short in any single year.  Although it often leads to challenging conversations between financial advisors and investors, we believe diversification is the right approach.

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