The concept of diversification is critical to the overall investment philosophy. Each asset class plays a specific role in the portfolio with the expectation that the asset classes will perform differently across a range of market environments. Certain asset classes are expected to have positive performance when others have negative performance. Collectively, this approach is designed to help reduce the downside over your investment timeline.
While using a diversified portfolio to reduce risk is a widely accepted investment principle, diversification cannot eliminate risk entirely, and the returns on a diversified portfolio during any given time period may be lower than the returns on one or more investments concentrated in an industry, sector or geographic region that was profitable during that time period.