Diversified ETF Portfolios Outperforming in All Market Conditions
The article shows that investing in a diversified portfolio with different types of assets can perform well in different market conditions, including during market crashes and bull phases. By using a mix of assets like index ETFs, the portfolio can outperform traditional equity indexes like the Russell 1000. This is because the diversified portfolio has lower overlap in how it generates returns, leading to better efficiency. The researchers used a method called generalized variance to measure the spread of risk within the portfolio. Overall, the study suggests that using index ETFs for multi-asset-class investing can be a beneficial strategy for a wide range of investors.