Diversifying to reduce risk is a key investment strategy. The reason: not all investments will perform in the same way at the same time. By holding a mix of bonds and equities across different markets and countries, some may be increasing in value while others are falling. This can help reduce the risk that comes from being overly concentrated in just a few investments. And over time, it tends to reduce volatility and smooth out returns.
Use the chart below to see how being diversified can help reduce risk
Pick an asset class from the boxes below and follow it across. As it reacts to market and economic conditions, the asset class may be a top performer one year and the worst the next. Now compare it to a hypothetical diversified portfolio*, which invests in a number of asset classes, and you will see the returns are less volatile and more consistent over time.
For illustrative purposes only. Returns have been rounded to the nearest whole number for simplicity. *The Diversified Portfolio is a hypothetical portfolio that is invested 10% in each asset class shown. The Diversified Portfolio is not intended to represent any investment managed by Sun Life Global Investments. It is not possible to invest in an index. For more information on the indices used to represent each asset class, please see reverse.
At Sun Life Global Investments, we believe long-term investment success requires effective risk management, and diversification plays a powerful role in that strategy.
For more information, speak to your advisor.
ABOUT THE CHART
Equity returns are represented by the following indices in C$ terms and include reinvestment of dividends: U.S. stocks: S&P 500 Index; Canadian stocks: S&P/TSX Composite Index; International stocks: MSCI EAFE Index; Emerging market stocks: MSCI Emerging Markets Index; Global stocks: MSCI World Index; Real estate: FTSE EPRA/NAREIT Developed Index; Infrastructure: S&P Global Infrastructure Index; Canadian bonds: FTSE Canada Universe Bond Index; U.S. bonds: Bloomberg U.S. Aggregate Bond Index; Global bonds: Bloomberg Global Aggregate Bond Index. The performance of each index including the diversified portfolio is provided to illustrate historical market trends; it does not represent the performance of a particular Sun Life Global Investments product. Source: Morningstar. Data as of year-end.
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Investors should read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.
The information contained in this document is provided for information purposes only and is not intended to represent specific individual financial investment, tax or legal advice nor does it constitute a specific offer to buy an/or sell securities. While the information contained in this document has been obtained from sources believed to be reliable, SLGI Asset Management Inc. cannot guarantee its accuracy, completeness or timeliness. Information in this document is subject to change without notice and SLGI Asset Management Inc. disclaims any responsibility to update it.
Sun Life Global Investments is a trade name of SLGI Asset Management Inc., Sun Life Assurance Company of Canada and Sun Life Financial Trust Inc.
© SLGI Asset Management Inc. and its licensors, 2022. SLGI Asset Management Inc. is a member of the Sun Life group of companies. All rights reserved.
