Majority of Investors Maintain a Diversified Portfolio

Last month’s Asset Allocation Survey special question asked AAII members if they purposely maintain a diversified portfolio. The overwhelming majority of respondents (77%) say yes, they do purposely diversify. Many of these respondents explain that they do so to reduce volatility and/or risks. About 18% say they don’t purposely diversify. Some of these respondents say they are all in stocks while others focus on what they consider to be the best investments.

Here is a sampling of the responses:

• “Yes, I like to have some protection against short-term market swings and headline risk.”
• “I don’t so much. I stay mostly in stocks or stock funds as they get a better return in the long run.”
• “I keep 10% to 15% in cash to take advantage of stock market dips.”
• “Not really. I try to invest wherever there is an opportunity.”
• “I believe that as a retiree, I should maintain a diversified portfolio because some of my assets may decline and others will appreciate.”