With the decline in both stocks and bonds this year, some investors have begun to question the value of a diversified portfolio.
But diversification remains a valuable tool, said Russell Kinnel, director of research manager at Morningstar. Given the ups and downs of nearly every asset class, it’s very difficult to predict each year’s winner, he notes.
For example, from early 2020 to now, commodities were big winners, but from 2011 to 2020, they were big losers. “Diversification is clearly the reasonable answer” to inter-market volatility, Kinnel wrote in a comment.