Diversification

Bonds usually — but not always — cushion

Bonds have historically softened equity drawdowns, though not in every episode (notably 2022, when both fell together).

What it means for your portfolio

Diversifiers reduce risk but don't remove it; know when they can fail at the same time.

Does this apply to your holdings?

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In sharp sell-offs, correlations between holdings tend to rise toward 1 as almost everything falls together.

Australian investors typically hold far more domestic equity than Australia's ~2% share of global markets.

Research by Hendrik Bessembinder found a small minority of stocks account for most of the market's long-run wealth creation.

General information only, not financial advice. Historical figures are approximate and provided for education.