Why Diversification Still Matters

I posted The Importance of Diversification chart last year in an article on Callan charts. In 2008, diversification across countries did not work well for investors as the majority of stock markets fell. However that does not mean diversification is dead. Diversification still matters. One can diversify by not only investing in different countries but can also diversify picking various sectors within a country. The following charts show the importance of diversification:

Click to enlarge

1. Periodic Table of Style Rotation — Why Diversification Matters

Diversification-Matters-Chart-1

2. Periodic Table of Sector Rotation — Why Diversification Matters

Diversification-Matters-Chart-2

 3.Annual Returns for Key Indices – 20 Years (1989-2008)
The IFA Periodic Table of Investment Returns 

IFA-Table-of-Investment-Returns

For the pdf versions, click here and here.

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