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How can you hold a winning portfolio without being able to predict the future? Spread your bets.

To be truly diversified is to hold some assets that are underperforming. Something will always be lagging while another area is rising.

As the chart illustrates, market leadership changes—sometimes dramatically—from year to year. If you load up on what’s working, you may miss out on tomorrow’s winners. For example, emerging markets went from worst to first in just two years, and then back to worst the next year.

Investor Charles Ellis captured it best: “The purpose of diversification is to force you to own things that you don’t want to own.”1

From Worst to First - Asset Class Performance Chart

Diversification does not guarantee against a loss, and there is no guarantee that a diversified portfolio will outperform a non-diversified portfolio. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown.
The data is presented for informational purposes only and is not meant to represent the performance of any Virtus product. 

1Charles D. Ellis, managing partner, Greenwich Associates, speaking at the Foundation Financial Officers Group annual meeting, New York, NY, October 14, 1999.

Emerging Markets are represented by the MSCI Emerging Markets Index (net). Fixed Income is represented by Bloomberg Barclays U.S. Aggregate Bond Index. International is represented by the MSCI EAFE® Index (net). Large-Cap Growth is represented by the Russell 1000® Growth Index. Large-Cap Value is represented by the Russell 1000® Value Index. Mid-Cap Growth is represented by the Russell Midcap® Growth Index. Mid-Cap Value is represented by the Russell Midcap® Value Index. REITs are represented by the FTSE Nareit Equity REITs Index. Small-Cap Growth is represented by the Russell 2000® Growth Index. Small-Cap Value is represented by the Russell 2000® Value Index.

MSCI Emerging Markets Index (net): A free float-adjusted market capitalization-weighted index designed to measure equity market performance in the global emerging markets. Bloomberg Barclays U.S. Aggregate Bond Index: Measures the U.S. investment grade fixed rate bond market. MSCI EAFE® Index (net): A free float-adjusted market capitalization-weighted index that measures developed foreign market equity performance, excluding the U.S. and Canada. Russell 1000® Growth Index: A market capitalization-weighted index of growth-oriented stocks of the 1,000 largest companies in the Russell Universe, which comprises the 3,000 largest U.S. companies. Russell 1000® Value Index: A market capitalization-weighted index of value-oriented stocks of the 1,000 largest companies in the Russell Universe, which comprises the 3,000 largest U.S. companies. Russell Midcap® Growth Index: A market capitalization-weighted index of medium-capitalization, growth-oriented stocks of U.S. companies. Russell Midcap® Value Index: A market capitalization-weighted index of medium-capitalization, value-oriented stocks of U.S. companies. FTSE Nareit Equity REITs Index: A free-float market capitalization-weighted index measuring equity tax-qualified real estate investment trusts, which meet minimum size and liquidity criteria, that are listed on the New York Stock Exchange, the American Stock Exchange and the Nasdaq National Market System. Russell 2000® Growth Index: A market capitalization-weighted index of growth-oriented stocks of the smallest 2,000 companies in the Russell Universe, which comprises the 3,000 largest U.S. companies. Russell 2000® Value Index: A market capitalization-weighted index of value-oriented stocks of the smallest 2,000 companies in the Russell Universe, which comprises the 3,000 largest U.S. companies. Performance of all cited indexes is calculated on a total-return basis with dividends reinvested. The indexes are unmanaged, their returns do not reflect any fees, expenses, or sales charges, and they are not available for direct investment