Decoding Markets: The accidental death of diversification

Schroders

Dan Suzuki

Research

14 Pages

Schroeders explains how the classic 60/40 portfolio became the most concentrated balanced portfolio in modern history, and how to bring genuine diversification back to life.

Date published: December 10, 2025

Key Takeaways

Concentration problem: Defines how classic balanced portfolios now lean heavily on a small set of large growth companies.
Bond hedge erosion: Notes that bonds have become less reliable shock absorbers when inflation and rates move together.
Rebuilding diversification: Suggests adding varied regions, factors and alternatives to spread risk across more independent drivers.
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