Wall Street investors favor diversified strategies for gains

Wall Street investors are starting to see success with diversification in their portfolios. As the tariff war continues, many are moving away from U.S. stocks. This shift has resulted in gains for assets like Treasury bonds, gold, and corporate debt. The changing market is a welcome sign for those who promote diversification strategies. In 2025, market disruptions have affected investor confidence in U.S. stocks. The S&P 500 ended last week slightly higher, but it remains in a correction phase. This trend is benefiting various investment strategies that had struggled during previous stock market rallies. An exchange-traded fund (ETF) called RPAR has performed well, rising over 5% this year. This outperforms the S&P 500 by about 9 percentage points. Meb Faber, a portfolio manager, noted that this comeback for diversification strategies feels long overdue. His global asset-allocation ETF is also seeing good returns this year. There is uncertainty about whether the current trend will continue. U.S. stocks have outperformed global investments in recent years but have shown signs of weakness. As American households invest more in stocks, the appetite for diversification may be growing. Coupled with the ETF boom, new trading options are becoming available. Recently, long-dated Treasury bonds have returned to favor as investors seek safety amid concerns about U.S. growth. A standard investment strategy that balances stocks and bonds is currently outperforming the S&P 500. Gold prices have also reached record highs, and stock-picking strategies are showing positive results. Despite the shifts, many smaller investors continue to buy U.S. stocks, especially in the tech sector, when prices drop. This pattern suggests a lasting confidence in quick rebounds. However, experts advise considering a broader range of investment strategies due to current uncertainties in the market. Some firms are promoting innovative investment strategies, like portable alpha, which helps diversify portfolios. These strategies often include a mix of stock trades and hedging options. Benjamin Hecht from AQR Capital Management stresses the importance of diversification now more than ever, as market timing can be challenging.