The Power of Diversification

A Diversified Portfolio* provides investors with a smoother ride over the long term. During sharp market downturns, a diversified portfolio has historically hurt investors less. Conversely, during market highs a diversified portfolio may not return as much as an index due to its balanced approach. The recovery periods are most notable in the charts below from the last two bear markets. The Diversified Portfolio took nearly one-fifth of the time to recover and nearly half the time to recover during the global financial crisis from the S&P 500 Index.

Do you remember what it felt like to be an investor in late 2008? 37 months is a long time to get back on a growth track.

Diversified Portfolio and S&P 500® Index Returns

Bear Drawdown
Months to Recover
Diversified Portfolio -22.7% 5
S&P 500® Index -33.8% 5
S&P 500
Returns 7.14 7.23
Standard Deviation 9.41 15.06
Max Drawdown -37.2% -55.3%

Source: Barclays, FactSet, Standard & Poor’s. As of June 30, 2021. Data date range is January 1999-June 2021.
Bear Market
defined as peak-to-trough decline of at least 20 percent. Standard Deviation (Std. Dev.): A measure of risk; it calculates the variability of returns by comparing the Fund’s return in each period with the average Fund return across all periods. Past performance is no guarantee of future results. 

*Diversified Portfolio

The indices are unmanaged, are not available for investment, and do not incur expenses. Click here for representative indices and definitions

Investments in debt securities are subject to credit and interest rate risk. An increase in interest rates typically causes the value of bonds and other fixed income securities to fall.
Investments in international securities are subject to certain risks of overseas investing including currency fluctuations and changes in political and economic conditions, which could result in significant market fluctuations. These risks are magnified in emerging markets.
Investments in small-capitalization companies are subject to greater price volatility, lower trading volume and less liquidity than investing in larger, more established companies.
Real estate investments are subject to factors such as changing general and local economic, financial, competitive and environmental conditions.
Alternative investments are speculative, subject to high return volatility and involve a high degree of risk including, but not limited to, the risks associated with leverage, derivative instruments such as options and futures, distressed securities, may be illiquid on a long term basis and short sales. There can be no assurance that these types of strategies will achieve their objectives or avoid substantial losses. Alternative investments may also be subject to significant fees and expenses.
Investments in emerging markets are subject to risks such as erratic earnings patterns, economic and political instability, changing exchange controls, limitations on repatriation of foreign capital and changes in local governmental attitudes toward private investment, possibly leading to nationalization or confiscation of investor assets.

Market Risk—Market prices of investments held by the Fund may fall rapidly or unpredictably due to a variety of economic or political factors, market conditions, disasters or public health issues, or in response to events that affect particular industries or companies.

AMG Distributors, Inc., a member of FINRA/SIPC.

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