Bar chart compares S&P 500 Index to a Hypothetical Moderate Growth and Income 3AG portfolio to show how a diversified allocation may help limit losses in down markets. (Table lists returns)
| Market dates | S&P 500 Index returns | Hypothetical Moderate Growth and Income liquid (3AG) portfolio returns |
|---|---|---|
| Oct 5, 1979 – Nov 7, 1979 | -9.35 | -7.27 |
| Feb 13, 1980 – Mar 27, 1980 | -16.69 | -4.64 |
| Nov 28, 1980 – Aug 12, 1982 | -26.93 | 1.48 |
| Oct 10, 1983 – Jul 24, 1984 | -13.45 | -3.24 |
| Aug 25, 1987 – Dec 4, 1987 | -32.82 | -13.86 |
| Jul 16, 1990 – Oct 11, 1990 | -19.56 | -12.92 |
| Jul 17, 1998 – Aug 31, 1998 | -19.15 | -12.60 |
| Mar 24, 2000 – Oct 9, 2002 | -49.14 | -19.42 |
| Nov 27, 2002 – Mar 11, 2003 | -12.33 | -3.89 |
| Oct 9, 2007 – Mar 9, 2009 | -56.43 | -36.35 |
| Apr 23, 2010 – Jul 2, 2010 | -15.40 | -7.64 |
| Apr 29, 2011 – Oct 3, 2011 | -19.20 | -11.93 |
| Apr 2, 2012 – Jun 1, 2012 | -9.26 | -5.48 |
| May 21, 2015 – Feb 11, 2016 | -13.96 | -11.14 |
| Jan 26, 2018 – Feb 8, 2018 | -9.10 | -5.45 |
| Sep 20, 2018 – Dec 24, 2018 | -19.15 | -9.54 |
| Feb 19, 2020 – Mar 23, 2020 | -33.61 | -22.11 |
Sources: © 2021 – Morningstar Direct, All Rights Reserved1, and Wells Fargo Investment Institute. Data from October 5, 1979 to September 30, 2021. 3AG = three-asset group. Performance results for the Moderate Growth and Income Liquid (3AG) Portfolio is hypothetical and is presented for illustrative purposes only. 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. An index is unmanaged and not available for direct investment. Hypothetical and past performance does not guarantee future results. Composition of the Portfolios provided at the “Index Definitions and Asset Class Risk Disclosures” link above.
Note: Corrections are declines of 10% or more. Bear markets are declines of 20% or more.
Diversification strategies do not guarantee investment returns or eliminate the risk of loss.
1. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
Key Takeaways
- A diversified allocation may not experience losses as sharp as an all-equity position during an equity correction or bear market.
- Attempting to reduce downside volatility is critical to long-term performance as it can allow a portfolio to recover more quickly after a crisis event.