Diversifying vs De-Risking Funds

Getting more bang for your buck

Nicolas Rabener
10 min read
13 Jul 2026

SUMMARY

  • Investors should differentiate between diversifying and de-risking funds
  • Most fixed income funds are de-risking strategies
  • Equity strategies provide the lowest diversification benefits

INTRODUCTION

In our recent research article, Diversification vs De-Risking: Evidence Across Asset Classes, we differentiated between diversification and de-risking: the former involves providing positive, uncorrelated returns, while the latter can be achieved simply by reducing the equity allocation and moving into cash or risk-free assets like T-Bills.

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