By dividing assets among different classes, multi-asset class investments boost the total portfolio’s diversification. Compared to having only one class of assets, this lowers risk (volatility), but it may also limit possible rewards. A multi-asset class investor, for instance, might own bonds, stocks, cash, and real estate, as opposed to a single asset class investor, who might solely own equities. One asset class may outperform another during a specific time frame, but historically no asset class has done so consistently.
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