Diversification is elementary to investing.

It can help you balance risk as you save for retirement, college or a second home. As the tables on this page illustrate, whether it’s stocks or bonds, the performance of different asset classes can vary significantly from year to year. By diversifying across multiple asset classes instead of concentrating investments in just one or two sectors, you can potentially reduce the risk of loss in any one particular area. Diversification does not assure a profit or protect against market loss.

 

Equity Class Returns

Annual returns of varied market indices

Equity Class Returns - Annual Returns of Varied Market Indices

Source: Legg Mason. Returns are as of December 31 of specified years. The table above is presented for informational purposes only and does not represent performance of any specific investment. An investor cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges. Past performance is no guarantee of future results. All investments involve risk, including loss of principal.  Average annual total return assumes the reinvestments of income dividends and capital gain distributions. Equity securities are subject to price fluctuation and possible loss of principal. Investments in small- and mid-capitalization companies may involve a higher degree of risk and volatility than investments in larger, more established companies. Foreign investments are subject to certain risks of overseas investing, including currency fluctuations and changes in political and economic conditions, which could result in significant market fluctuations. These risks are magnified in emerging markets. Diversification does not ensure a profit or protect against market loss.
 

Fixed Income Class Returns

Annual returns of varied market indices

Fixed-Income Class Returns - Annual Returns of Varied Market Indices

Source: Legg Mason. Returns are as of December 31 of specified years. The table above is presented for informational purposes only and does not represent performance of any specific investment. An investor cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges. Past performance is no guarantee of future results. All investments involve risk, including loss of principal. 

Equity securities are subject to price fluctuation and possible loss of principal. Fixed income investments are subject to interest rate risk. As rates rise, the price of fixed income securities falls. There is also a risk that an issuer will be unable to make principal and/or interest payments. High yield bonds are subject to increased risk of default and greater volatility due to the lower credit quality of the issues. Mortgage-backed securities involve additional risk over more traditional fixed income investments, including: interest rate risk, implied call and extension risks, and the possibility of premature return of principal due to mortgage prepayment, which can reduce expected yield and lead to price volatility.

 


Your financial professional can help you develop a long-term investment plan with a balance of strategies that addresses your need for portfolio growth, income, capital preservation and risk management.

 

 

All investments involve risk, including possible loss of principal. Past performance is no guarantee of future results. Indexes are unmanaged, and not available for direct investment. Index returns do not include fees or sales charges.

Equity investments generally provide an opportunity for more capital appreciation than fixed income investments, but they are subject to greater market fluctuations.

Diversification does not assure a profit or protect against market loss.

Any information, statement or opinion set forth herein is general in nature, is not directed to or based on the financial situation or needs of any particular investor, and does not constitute, and should not be construed as, investment advice, forecast of future events, a guarantee of future results, or a recommendation with respect to any particular security or investment strategy or type of retirement account. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies should consult their financial professional.