2025's Hidden Market Winner: Why Diversified Strategies Are Making a Comeback for Savvy Investors

While the world was captivated by AI and crypto, a quieter trend emerged in 2025: diversified strategies posted some of their strongest returns in years. Simple portfolios split between stocks and bonds delivered double-digit advances, the best year since 2019. Multi-asset funds blending commodities, bonds, and global equities outperformed the S&P 500.

The Return of Old-School Prudence

This week's inflation report was a lesson in the wisdom of diversified strategies. Softer-than-expected US inflation data sparked a rare in-tandem rally in both stocks and bonds. Risk parity funds posted gains, reminding us that market conditions still reward balance.

A Word of Caution

Remember, this is perspective, not prediction. Do your own research and consider your own financial goals and risk tolerance before making any investment decisions.

The Shift to Alternative Assets

Capital has flowed into alternative assets, such as private credit and infrastructure, as investors seek exposure beyond public markets. In some cases, the search has become less about portfolio balance and more about access to alternative assets, yield, or insulation from public-market volatility.

• Value-oriented equity ETFs pulled in over $56 billion this year, the second-largest annual inflow since at least 2000.
• Cambria's Global Value ETF jumped roughly 50%, its best since launch.
• International stocks rebounded on fiscal reform tailwinds and a weaker dollar.

What to Expect in 2026

Some strategists believe the shift will extend into 2026, with US earnings growth broadening and small caps and international stocks outperforming. Others see signs of froth, with 2025 showing the second-strongest dip-buying impulse in nearly a century.