The Case for Diversification

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This chart ranks nine asset classes from best to worst each year. One key observation is that top-performing asset classes often change from year to year, underscoring the potential value of maintaining a diversified portfolio rather than focusing on a single asset class.

Click any asset class to highlight it.

Large Cap Small Cap Int'l Dev Emg Markets REITs HG Bonds HY Bonds Cash Diversified

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Ann.

REITs+8.3%

REITs+19.7%

Sm Cap+38.8%

REITs+28.0%

REITs+2.8%

Sm Cap+21.3%

Emg Mkts+37.8%

Cash+1.8%

Lg Cap+31.5%

Sm Cap+20.0%

REITs+41.3%

Cash+1.6%

Lg Cap+26.3%

Lg Cap+25.0%

Emg Mkts+34.4%

Lg Cap14.1%

HG Bnd+7.8%

Emg Mkts+18.6%

Lg Cap+32.4%

Lg Cap+13.7%

Lg Cap+1.4%

HY Bnd+17.5%

Int'l+25.6%

HG Bnd0.0%

REITs+28.7%

Emg Mkts+18.7%

Lg Cap+28.7%

HY Bnd-11.2%

Int'l+18.9%

Sm Cap+11.5%

Int'l+31.9%

Sm Cap9.5%

HY Bnd+4.4%

Int'l+17.9%

Int'l+23.3%

Divers.+6.9%

HG Bnd+0.6%

Lg Cap+12.0%

Lg Cap+21.8%

HY Bnd-2.3%

Sm Cap+25.5%

Lg Cap+18.4%

Sm Cap+14.8%

HG Bnd-13.0%

Sm Cap+16.9%

HY Bnd+8.2%

Lg Cap+17.9%

REITs7.8%

Lg Cap+2.1%

Sm Cap+16.4%

Divers.+11.5%

HG Bnd+6.0%

Cash0.0%

Emg Mkts+11.6%

Sm Cap+14.7%

REITs-4.0%

Int'l+22.7%

Divers.+9.8%

Int'l+11.8%

Int'l-14.0%

HY Bnd+13.5%

Emg Mkts+8.1%

Divers.+15.3%

Int'l7.2%

Divers.+0.3%

Lg Cap+16.0%

HY Bnd+7.4%

Sm Cap+4.9%

Int'l-0.4%

REITs+8.6%

Divers.+14.6%

Lg Cap-4.4%

Divers.+18.9%

Int'l+8.3%

Divers.+10.9%

Divers.-16.5%

Divers.+12.8%

Divers.+7.4%

Sm Cap+12.8%

Divers.6.6%

Cash+0.1%

HY Bnd+15.6%

REITs+2.9%

HY Bnd+2.5%

Divers.-1.3%

Divers.+7.2%

REITs+8.7%

Divers.-5.6%

Emg Mkts+18.9%

HY Bnd+7.5%

HY Bnd+5.4%

Lg Cap-18.1%

REITs+11.4%

Cash+5.3%

HY Bnd+8.5%

HY Bnd6.0%

Sm Cap-4.2%

Divers.+12.2%

Cash+0.1%

Cash0.0%

Sm Cap-4.4%

HG Bnd+2.7%

HY Bnd+7.5%

Sm Cap-11.0%

HY Bnd+14.4%

HG Bnd+6.1%

Cash0.0%

Emg Mkts-19.7%

Emg Mkts+10.3%

REITs+4.9%

HG Bnd+7.3%

Emg Mkts4.2%

Int'l-11.7%

HG Bnd+4.2%

HG Bnd-2.0%

Emg Mkts-1.8%

HY Bnd-4.6%

Int'l+1.5%

HG Bnd+3.5%

Int'l-13.4%

HG Bnd+8.7%

Cash+0.6%

HG Bnd-1.5%

Sm Cap-20.4%

HG Bnd+5.5%

Int'l+4.4%

Cash+4.3%

HG Bnd2.3%

Emg Mkts-18.2%

Cash+0.1%

Emg Mkts-2.3%

Int'l-4.5%

Emg Mkts-14.6%

Cash+0.3%

Cash+0.8%

Emg Mkts-14.3%

Cash+2.2%

REITs-5.1%

Emg Mkts-2.2%

REITs-25.0%

Cash+5.1%

HG Bnd+1.3%

REITs+2.3%

Cash1.5%

The point isn't picking the winner each year - it's avoiding the tendency to focus on last year's best performer. Over the past 15 years, leadership among asset classes has shifted frequently, highlighting the potential benefits of maintaining a diversified portfolio. By spreading investments across multiple asset classes, investors may be better positioned to navigate changing market conditions. Asset allocation and diversification do not ensure a profit or protect against loss.

Want to see how your current portfolio stacks up? Let's take a look together.

Source: Data compiled from publicly available index total returns. Large Cap: S&P 500; Small Cap: Russell 2000; Int'l Developed: MSCI EAFE; Emerging Markets: MSCI EM; REITs: FTSE NAREIT All Equity; High Grade Bonds: Bloomberg U.S. Aggregate; High Yield Bonds: ICE BofA U.S. High Yield; Cash: S&P U.S. Treasury Bill 0–3 Mo. Asset Allocation: 15% Large Cap, 15% Int'l, 10% Small Cap, 10% EM, 10% REITs, 40% HG Bonds, rebalanced annually. Inspired by J.P. Morgan's Guide to the Markets, Asset Class Returns (pg. 56). Past performance does not guarantee future results. All returns are total returns including reinvested distributions through 12/31/2025. Not investment advice.