Diversification can help reduce overall portfolio risk—if a single investment is not performing well, it can be balanced by other investments that are performing better.
Lesson #4 - Diversify! It may not work all the time, but it works over time.
Diversification can help reduce overall portfolio risk—if a single investment is not performing well, it can be balanced by other investments that are performing better.
Diversification does not protect an investor from market risk and does not ensure a profit. Please see end disclosures for asset class definitions. Past performance does not guarantee future results.
Source: Morningstar. This example is for illustrative purposes only and does not represent any Goldman Sachs product.
Asset class definitions: Long term performance of broad-based asset classes – index information: U.S. large-cap stocks are represented by the S&P 500 – a broad-based index of 500 widely held common stocks. Cash is represented by the Citi Treasury Bill 1 Month Index tracks the performance of U.S. Treasury Bills. Small cap stocks are represented by the Russell 2000 Index, which measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 Index is a subset of the Russell 3000® Index representing approximately 10% of the total market capitalization of that index. Mid cap stocks are represented by the Russell Midcap Index, which measures the performance of the 800 smallest companies in the Russell 1000 Index, which represents approximately 25% of the total market capitalization of the Russell 1000 Index. International stocks are represented by the MSCI EAFE – the Morgan Stanley Capital International Europe, Australasia, Far East (EAFE) Index, an unhedged composite of securities in twenty-one developed markets. Bonds are represented by the Barclays Capital Aggregate Bond – an index comprised of fixed income securities, such as U.S. Treasuries, investment-grade corporates, and mortgage-backed and asset-backed securities. MSCI EAFE Index – an market capitalization-weighted composite of securities in 21 developed markets. Investors cannot invest directly in indices. The indices are unmanaged and the figures for the Index reflect the reinvestment of dividends, but do not include any deduction for fees, expenses or taxes. Diversification does not protect an investor from market risk and does not ensure a profit. Past performance does not guarantee future results.