Asset Allocation

The Benefits of a Diversified Portfolio

See how the year-to-year movement of the markets demonstrate the importance of maintaining a diversified portfolio.

Investors can choose from a wide array of global assets, with each segment offering a distinct risk/return profile.

What This Chart Shows

This "quilt" chart shows the annual returns over the past five years for a broad range of investment sectors ranked from best to worst. Performance has varied widely, with no single sector dominating year after year.

What It Means For Investors

Maintaining a diversified portfolio can help investors prepare for shifts in the economy and interest rates, providing potential to not only capture opportunities but also minimize risks of over concentration.



Data as of 31 March 2016. • Global Equities, represented by MSCI World Index • Non-U.S. Developed Market Equities represented by MSCI EAFE Index • EM Equities represented by MSCI EM • U.S. Equities represented by S&P 500 • U.S. Bonds represented by Barclays Aggregate Index • U.S. Credit represented by Barclays Capital U.S. Credit Index • U.S. High Yield represented by BofA Merrill Lynch U.S. High Yield, BB-B Rated, Constrained Index • TIPS represented by Barclays U.S. TIPS Index • Treasuries represented by Barclays U.S. Agg Total Treasury Index • T-Bills represented by BofA Merrill Lynch 3-Month Treasury Bill Index • Global Developed Bonds represented by Barclays Global Aggregate Index • Global Inflation Linked Bonds represented by Barclays World Govt Inflation Linked • EM External represented by JPM EMBI Global • EM Local represented by JPM GBI-EM Global Div Unhedged • EM Corporates represented by JPM CEMBI Div • EM FX represented by JPM ELMI+ Unhedged • Crude Oil represented by WTI • Gold represented by Gold • Commodities represented by Commodities • REITS represented by DJ Equity REIT Index • Hedge Funds (All) represented by HFRX Index • Macro HF represented by HFRX Macro Index • Event Driven HF represented by HFRX Ev Dr Index • Equity Neutral HF represented by HFRX Eq Ntrl • Rel Value HF represented by HFRX Rel Val • Managed Futures represented by SG Trend Index. It is not possible to invest directly in an unmanaged index.

A word about risk: Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and the current low interest rate environment increases this risk. Current reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Investing in foreign-denominated and/or -domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. High yield, lower-rated securities involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not. Inflation-linked bonds (ILBs) issued by a government are fixed income securities whose principal value is periodically adjusted according to the rate of inflation; ILBs decline in value when real interest rates rise. Treasury Inflation-Protected Securities (TIPS) are ILBs issued by the U.S. government. Bank loans are often less liquid than other types of debt instruments and general market and financial conditions may affect the prepayment of bank loans, as such the prepayments cannot be predicted with accuracy. There is no assurance that the liquidation of any collateral from a secured bank loan would satisfy the borrower’s obligation, or that such collateral could be liquidated. Income from municipal bonds may be subject to state and local taxes and at times the alternative minimum tax. Mortgage- and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and while generally supported by a government, government-agency or private guarantor, there is no assurance that the guarantor will meet its obligations. Diversification does not ensure against loss.

This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America L.P. in the United States and throughout the world. PIMCO Investments LLC, distributor, 1633 Broadway, New York, NY 10019 is a company of PIMCO. © 2016 PIMCO