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Use select charts from the Guide to the Markets to engage in portfolio discussions.

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Alternative strategies

Adding alternative assets to a diversified portfolio can help investors dampen volatility and potentially increase returns over the long term.

Economic Expansions and Recessions
The importance of diversification
  • Between 2003 and 2012, the S&P 500 returned 98.6% (cumulative total return).
  • However, a well-diversified portfolio, such as the hypothetical one illustrated on slide 57, outperformed the S&P 500 by roughly 20% during this difficult period.*
  • It is important to remember that even alternatives should be well diversified, as they too can experience volatility from year to year. For example, compare commodity returns in 2006 with those in 2007.

*The hypothetical portfolio assumes the following weights: 25% in the S&P 500, 10% in the Russell 2000, 15% in the MSCI EAFE, 5% in the MSCI EMI, 30% in the Barclays Capital Aggregate, 5% in the CS/Tremont Equity Market Neutral Index, 5% in the DJ UBS Commodity Index and 5% in the NAREIT Equity REIT Index. Hypothetical portfolio assumes annual rebalancing.

Discussion Slides
Correlations and volatility
Diversification and the average investor
Asset class returns