Retirement Advisers Rethink Diversification as 90% of Assets Move With S&P 500
Updated
Updated · PLANADVISER · Aug 3
Retirement Advisers Rethink Diversification as 90% of Assets Move With S&P 500
1 articles · Updated · PLANADVISER · Aug 3
Summary
More than 90% of the world’s investable assets now move in step with the S&P 500, advisers say, pushing retirement-plan fiduciaries to revisit the old stock-bond, U.S.-international diversification playbook.
Talaria data for 2021-2026 showed correlations still high for assets often treated as diversifiers, including REITs at 0.82, equity hedge at 0.81, global aggregate bonds at 0.61 and global Treasuries at 0.58.
International exposure is being redefined as owning companies shaped by different local economies, leading some advisers to emphasize small-cap and emerging-market options rather than relying on U.S. multinationals’ overseas sales.
Index funds are also under scrutiny because concentration has surged: BlackRock found the top 20 companies made up 49% of the S&P 500 in April, complicating performance comparisons and masking single-stock risk.
Advisers say the goal is less to chase returns than to build lineups participants can hold through volatility, especially near retirement, with asset allocation driving 80% to 90% of outcomes and education helping investors stay invested.