Every good planner preaches the glory of diversification. It is a core investing philosophy and a committed approach, rather than a trendy tactic. But here’s a reality that is less pleasant to disclose to a client: A diversified portfolio will never be the best performer in any given year.

The best performer over short time frames will always be a single asset class that is currently in favor. Comparing a broadly diversified portfolio with the best performer of the year is complete nonsense, yet many clients can’t resist doing it.

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