Making sure that clients don’t put all their eggs in one basket sometimes means adding new types of assets to the mix.

Beyond the well-known categories of large-capitalization, small-cap, developed international and fixed income are a variety of other asset classes that may provide diversification for those with a higher risk tolerance, says Claudia Mott, a CFP and the principal of Epona Financial Solutions in Basking Ridge, N.J.

Emerging markets have had moments of significant outperformance vis-à-vis other segments over the past 19 years, but the volatility of the returns is also substantially higher, she says.

Similarly, commodity funds that contain gold stocks may be considered a defensive investment during a market downturn but could be laggards when the market is performing well.

Alternatives are a relatively new asset class designed to limit downside risk.

“All of these segments can have a place in a well-diversified portfolio, as long as the investor is willing to accept the risk that comes along with the investment,” Mott says.

Catherine Seeber, a CFP and a partner and senior adviser at Wescott Financial Advisory Group in Philadelphia, says before adding “the next best flavor” to the portfolio, clients need to ask: How correlated is it to the other holdings; what is the risk; what does it contribute that the other holdings can’t provide; how liquid is it; what are the costs associated with owning it; and do I understand it?

Robert Pagliarini, a planner and author of “The Sudden Wealth Solution: 12 Principles to Transform Sudden Wealth into Lasting Wealth” (Harbinger Press, 2015) says that he is much more inclined to use less esoteric asset classes and to put together an allocation where there is a vision for the portfolio and not a “let’s-throw-everything-against-the-wall-and-see-what-sticks” approach.

“The reason for this is simple,” says Pagliarini, a CFP who is also president of Pacifica Wealth Advisors in Mission Viejo, Calif. “Every bet you make on one approach is taking dollars away from another investment.”

Kevin Meehan, a CFP and regional president of Wealth Enhancement Group in Itasca, Ill., says that while his team thinks that asset class diversification is one way to potentially reduce portfolio risk, another layer of diversification may further reduce risk while seeking to maximize return.

“Many investors don’t even realize that they have excessive risk in their portfolio because there’s a misconception that asset class is the only way to diversify holdings,” he says.

“Company risk is a great example: If you held Lehman stock and Lehman bonds when they went under, asset class diversification didn’t help you very much, did it? By adding that additional layer of analysis, we can help deduct underlying risk among investments to help prevent overexposure,” Meehan says.

This story is part of a 30-30 series on ways to build a better portfolio.