"Is diversification still worthwhile?"
"Why buy bonds when rates are going up?"
These are two of the most common questions that I'm asked by investors. The latter one for over 20 years!
After several years of the largest domestic stocks outperforming, well, just about everything, it can be easy to forget why investing in small/mid sized companies and internationally in both developed and emerging markets makes sense.
It is also understandable to be concerned about the impact of rising rates, especially since the Federal Reserve increased them in December. However, it may be surprising to many that market driven rates have actually fallen since the hike. In this week's Accountable Update, I share perspective on both of these questions with "Issue Briefs" from my friends at Dimensional Fund Advisors.
The first, titled Why Should You Diversify?, reviews why spreading your eggs to more than one basket still matters. If you read this blog often, much of this piece will be information that is probably already familiar, but an occasional refresher never hurts.
In the second, Revisiting Yields, DFA discusses their strategy of designing bond portfolios that may increase expected returns by using information in the yield curve and applying it globally and with varying maturities.
If you would like to review your diversification, yields, or overall portfolio and goals, get in touch.