Morningstar’s Guide to Portfolio Diversification

A useful toolkit provides multiple ways to tackle a task. Similarly, a diversified portfolio that holds a variety of assets—stocks, bonds, cash, and more—allows you to cope with volatile markets while keeping your money protected and growing.

The value of portfolio diversification was demonstrated throughout 2025, as tariff announcements and government policy changes made investing feel uncertain.

“Portfolio diversification had its most decisive victory in several years during 2025’s turbulent but generally bullish market environment,” says Morningstar portfolio strategist Amy Arnott. “Even as US stocks notched yet another year of above-average returns, non-US stocks fared even better, and gold surged by nearly 70%,” she adds.

Below, explore the newest findings in portfolio diversification strategy from Morningstar’s experts.

Building a Diversified Portfolio

Portfolio diversification means more than just collecting a variety of assets. The approach that’s right for you will depend on factors like your goals, time horizon, and risk tolerance.

Morningstar’s research can help you find the right assets and investing style, so you can build a portfolio to handle any market condition.

Finding Diversifying Value in International Investing

When markets at home are bumpy, international investments and foreign-currency exposure can start to look appealing. “International stocks have two main advantages: diversification and the potential to perform better than US stocks over certain periods,” says Arnott.

Below are some tips and points to remember when investing in foreign markets.

Diversification Ideas for Retirees

For investors who are approaching or already in retirement, portfolio diversification can feel complicated. You don’t want to risk your retirement money when you also have to consider RMDs, Social Security, and taxes. However, holding too many conservative investments can limit your investment growth.

Below are some investing ideas to help balance your assets for growth while ensuring financial stability.