An asset allocation strategy diversifies investments across different asset classes and global markets with the goal of improving the balance of reward and risk.
Consistent diversification can be a wise strategy.
In this hypothetical comparison, an asset allocation strategy — consistently diversified across multiple asset classes — produced a better combination of risk and return than strategies that focused on the best or worst performers of previous years.
Asset allocation achieved the best results.Diversifying across several asset classes with an asset allocation approach was the most effective strategy for accumulating wealth.
Diversification does not assure a profit or protect against loss. It is possible to lose money in a diversified portfolio.
Asset classes shown in the tile chart and the performance comparison bar chart are represented by 11 indexes. The asset allocation scenario is based on investments evenly distributed across these asset classes.
The examples are for illustrative purposes only and do not reflect average annualized returns or the performance of any Putnam fund, which will fluctuate. Data are historical. Past performance is not a guarantee of future results. All indexes are unmanaged and measure common sectors of global asset markets. Securities in the indexes do not match those in Putnam funds, and performance will differ. Securities indexes assume reinvestment of distributions and interest payments, and do not take into account brokerage fees and taxes. It is not possible to invest directly in an index.