As wealth advisers, we talk to our clients about the power of diversification at every meeting. Some parts of a portfolio may be going up when others are going down. More recently, high-quality diversification is hard to find. Why? Public markets continue to shrink. Market concentration continues to rise, and the Magnificent 7 stocks drive most of the returns in the S&P 500 index.
The current scenario means many investors face heightened risks that come with a less diversified investment mix and higher correlation of standard asset classes. Meanwhile, private markets are increasingly eclipsing their public counterparts — more than 85% of U.S. companies with revenue exceeding $100 million are privately held, according to Bain estimates.
