The need for diversification in one’s investment portfolio was stressed by Charles Schwab and BNY Mellon executives at last week’s Schwab Impact conference in San Diego.
Diversification is “critically important,” according to Gautam Khanna, senior portfolio manager at BNY Mellon’s Insight Investment specialist global asset management division. And “it’s not enough to have a handful of guys … run a broad market fixed income [strategy] because each area requires specialization,” he told ThinkAdvisor in an interview. That’s “part of how we deliver steady, stable returns through time,” he said.
“Diversification is always important because we live in an uncertain world,” he said, adding: “If we didn’t, we all would be sitting on the beach and enjoying the virtues of having a crystal ball. But that’s obviously not the case.”
Diversification is particularly important with a fixed income offering, which Insight Investment specializes in, because the “last thing that an investor wants is to be surprised by their fixed income asset allocation,” he said.
“There are arguably, at the moment, fewer shock absorbers in the economy so you want to be very careful about your asset allocation,” he went on to note. Therefore, it’s crucial to have the right balance in one’s portfolio between income generation and “interest rate-sensitive assets that will rally if risks flare up,” he said. It’s also why there’s so much reaction to “every little tweet” these days, he added.
Reminding everyone about the “value of diversification,” meanwhile, was one of the main themes that Jeffrey Kleintop, chief global investment strategist at Charles Schwab, told ThinkAdvisor he was out to communicate in his comments during an earlier presentation at the conference.