The Portfolio That Has Been Beating the Classic 60/40, and Why It Matters for You

Don't underestimate the benefits of portfolio diversification. A well-diversified portfolio can ride waves of market volatility, and new Morningstar research found that's what happened in 2025. When uncertainty emerged at times during the generally bullish market, the report identifies which asset classes performed well, which didn't, and how the classic 60/40 portfolio fared. So, what are the biggest challenges for portfolio diversification today? Amy Arnott is one of the co-authors of the 2026 Diversification Landscape Report.

Why Portfolio Diversification Has Paid Off—but More Isn’t Always Better (morningstar.com/portfolios/why-portfolio-diver…)

On this episode:

00:00:00 Welcome

00:01:19 Market trends shaping investor sentiment in 2026

00:02:27 Leading and lagging asset classes year to date

00:03:15 Inside Morningstar's 2026 Diversification Landscape Report

00:04:11 60/40 vs. diversified test portfolio and how each performed

00:07:38 Rising inflation and what it means for bonds

00:10:48 How retirees and risk-averse investors can manage volatility

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Will Vacation Inflation Affect Your Summer Travel? Here’s What to Know (morningstar.com/stocks/will-vacation-inflation…)

Bond ETF Flows Just Flipped. Here’s What It Means for You (morningstar.com/bonds/bond-etf-flows-just-flip…)

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