Diversification may improve risk-adjusted returns

Sources: © 2022 – Morningstar Direct, All Rights Reserved1, and Wells Fargo Investment Institute. Data from September 1, 2002 to September 30, 2022. Performance for the Moderate Growth and Income Liquid Portfolio is hypothetical and for illustrative purposes only. Moderate Growth & Income allocation is dynamic and changes as needed with adjustments to the strategic allocations. Index returns do not represent investment performance or the results of actual trading. Index returns reflect general market results, assume the reinvestment of dividends and other distributions, and do not reflect deduction for fees, expenses or taxes applicable to an actual investment. Hypothetical and past performance does not guarantee future results. Standard deviation is a measure of the volatility of returns. The higher the standard deviation, the greater volatility has been. See “Index Definitions and Asset Class Risk Disclosures” link above for index definitions, the risk associated with the representative asset classes, and the composition of the Portfolios.

Diversification does not guarantee investment returns or eliminate risk of loss.

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Key Takeaways

  • Over time, a diversified portfolio has helped mitigate volatility during times of market uncertainty and smooth out returns.
  • Real assets and alternative investments can add an element of diversification to a traditional portfolio comprised of stocks and bonds.