Diversification has made a comeback in 2014. Last year, market leadership was very narrow. U.S. stocks were the runaway winner, while many other asset classes struggled (chart). Hardest hit were sectors sensitive to interest rates, as well as those tied to inflation, including commodities and gold.

Thus far in 2014, were experiencing a more normal market environment. U.S. stocks are in the middle of the pack, with a number of asset classes outperforming and underperforming. Some of last years worst performing sectors are among this years best.

We continue to believe investors should seek broad diversification in portfolios, 2013s dynamic notwithstanding. Over the long run, we believe owning a variety of asset classes can help investors to better navigate the markets ups and downs.