The World Is Changing. Is Your Portfolio Ready?

Bridgewater

Article

1 Pages

Bridgewater examines how investors can prepare for a changing market regime after an exceptional run in US equities. It argues portfolios have become unusually concentrated, while diversification across bonds, inflation linked assets, commodities, gold, and countries may improve resilience without abandoning equity exposure.

Key Takeaways

Exceptional Equity Run: From 2010 to 2024, US equities returned 12.2% above cash versus a 5.9% average across 15 year periods since 1970.
Concentration Has Increased: US households hold around 80% of financial assets in equities, while an 80/20 stock bond portfolio has shown a 0.99 correlation with equities.US households hold around 80% of financial assets in equities, while an 80/20 stock bond portfolio has shown a 0.99 correlation with equities.
Diversifiers Behave Differently: Across 10 global equity declines exceeding 15% since 1970, nominal bonds and gold each provided diversification in 6 episodes.
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