You never know which market segments will outperform from year to year. By holding a globally diversified portfolio, investors are well positioned to seek returns wherever they occur.
Even with a globally diversified portfolio, market movements can tempt investors to switch asset classes based on predictions of future performance.
The graphic above features annual ranked performance of major asset classes in the US and international markets over the past 15 years. The asset classes are represented by corresponding market indices. The patchwork dispersion of colors shows that the relative performance of asset classes is unpredictable across periods.
Investors who follow a structured, diversified approach are well positioned to seek returns whenever and wherever they occur. Diversification also reduces the risk of being heavily invested in an underperforming asset group in any given year.