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Comment on Advisers urged to rethink diversification as volatility risk rises by Greg Neall
['Momodou Musa Touray']
Comments for Money Marketing
Advisers are being urged to rethink what “diversification” really means as traditional equity and bond mixes prove less reliable during periods of heightened volatility.
That year saw simultaneous falls in equities and bonds, undermining the traditional 60/40 framework and leaving investors across risk bands with broadly similar experiences.
The paper uses M&G’s PruFund range as an example of a multi-asset approach positioned around return consistency, including exposure to real assets.
Green said that, done well, broader diversification should not necessarily mean sacrificing performance, but improving consistency and helping clients remain invested through volatile periods.
“It helps advisers give customers more predictable outcomes,” he said, “and ultimately deliver a more robust retirement proposition through consistency of outcome.”