The Value of Income Diversification
We highlight key turning points in market leadership over the past three plus decades. Additionally, we outline how allocating to a value and income-oriented strategy can provide robust diversification elements and lead to better returns relative to an S&P 500® Index allocation alone.
For the past 30 years, investors have bid up an investment theme each decade, typically resulting in the overvaluation of that particular market segment. Due to excitement surrounding the popular theme of the moment, the S&P 500® Index typically becomes overweight the thematic winner of the prior ten years. In each occasion, the previous winner stumbled during the subsequent decade as the dominant theme did not perform as well as investors expected. This phenomenon informs our belief that the future can be very difficult to predict.