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

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Staying balanced in volatile markets

Building - and maintaining - an appropriate asset allocation can help you increase returns and reduce volatility over time. Market volatility can be an opportunity to rebalance back to an allocation that reflects your investment and income objectives, time horizon and tolerance for risk.

Economic Expansions and Recessions
Diversification can help improve returns and reduce volatility
  • Individual asset class returns can vary significantly, especially in the short term.
  • Since the asset classes do not move in lockstep, being appropriately diversified across a broader opportunity set can help reduce volatility and increase long-term returns.
  • For example, a hypothetical diversified portfolio would have returned 118% over the past 10 years, while the S&P 500 returned only 99% over the same period.*
  • Because asset allocation is a key driver of returns, it's important to rebalance regularly to adjust for large market fluctuations and the resulting portfolio imbalances.

*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
Asset class returns
Historical returns by holding period
Cash accounts

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