Morningstar analyzes how asset-class correlations and performance trends over 2023 affected portfolio diversification, concluding that a simple 60/40 mix remains one of the most effective long-term strategies. They caution that diversification benefits may be limited during rising-rate regimes, though certain assets like commodities and cash still play distinct roles.
2024 Diversification Landscape
Morningstar
Amy Arnott, Christine Benz, Karen Zaya
Research
52 Pages
Key Takeaways
60/40 resilience: A traditional U.S. 60/40 portfolio delivered ~18% in 2023—outpacing more diversified mixes due to high stock-bond correlation and strong bond returns
Correlations rising: Over the past two decades, most asset classes—including global bonds, REITs, and corporate credit—have shown increasing correlation with U.S. equities, reducing diversification benefits
Select diversifiers matter: Assets like commodities, gold, cash, and some alternative strategies still offer unique diversification potential—especially during equity downturns or inflationary periods
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