Diversification Is Back, Baby
2025’s comeback kid has risen from the ‘dead.’
Article published: December 08, 2025
Remember back in 2022 when headlines declared the 60/40 portfolio dead? (Not our headlines, to be clear.) The media loves declaring things “over,” and they’re often wrong – happily in the case of diversification, not so much when it comes to trends we’d all rather leave behind.
Admittedly, 2022 was rough. Stocks fell. Bonds fell. U.S., international – red across the board. Diversification seemed like it had just ghosted investors.
But here we are in 2025, and it’s undeniable – diversification still works exactly as it should. As we’ve always insisted, 2022 was an outlier, not a new normal. Let’s review the replay.
WHAT’S THE BIG DEAL ABOUT DIVERSIFICATION?
Diversification means spreading your money across different types of assets – stocks, bonds, international equities, for example. The idea? When one part of your portfolio is having a bad day, another part might be holding steady or even thriving.
It doesn’t guarantee profits, but it helps manage risk so you’re not betting everything on one horse.
2025: DIVERSIFICATION NAILS IT OVER THE PLATE
STOCKS
U.S. stocks – represented by the headline S&P 500– were up about 15% through the end of the third quarter. That’s a healthy premium over the long-term average.
BONDS
Here’s diversification on full display: When stocks had a rough time earlier this year (thanks to tariff drama), long-term Treasury bonds stepped up with gains of over 4% in just two months. They’re up 5.6% through the third quarter. Even better – they’ve been providing a healthy yield over 4% as well.
That can be a benefit of holding bonds when stocks are down. They usually have a negative correlation with stock returns, meaning they move in opposite directions.
INTERNATIONAL STOCKS
International stocks had been wandering in the wilderness for a few years, but in 2025, they had a banner year too. Developed markets (MSCI EAFE) climbed over 25% through the third quarter, and emerging markets soared almost 27%. Why? A weaker dollar and global growth trends, plus some ironic boosts from tariffs and shifting geopolitical dynamics that are encouraging investment in places other than the U.S.
WHY DIVERSIFICATION SOMETIMES FEELS LIKE A BUZZKILL
Here’s the truth: Diversification means you’ll never have the bragging rights that come with being all in on the year’s best-performing asset class. But, no matter what it is, you’ll ideally own some of it! And the goal of diversification is that you won’t be stuck holding a bagful of the worst asset class, either. This balanced approach is our best strategy to helping you reach your long-term financial goals through the ups and downs that we know will come in the markets.
LONG LIVE DIVERSIFICATION
Diversification isn’t dead. It never was.
So next time you hear someone proclaim that the 60/40 portfolio is so over, smile and remember: Rumors of its death have been greatly exaggerated.
This material was prepared for educational purposes only. Although the information has been gathered from sources believed to be reliable, we do not guarantee its accuracy or completeness.
An index is a portfolio of specific securities (such as the S&P 500, Dow Jones Industrial Average and Nasdaq composite), the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Indexes are unmanaged portfolios and investors cannot invest directly in an index.
Investing strategies, such as asset allocation, diversification or rebalancing, do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. All investments have inherent risks, including loss of principal. There are no guarantees that a portfolio employing these or any other strategy will outperform a portfolio that does not engage in such strategies.
Past performance does not guarantee future results.
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