5 Smart Ways to Diversify Your Portfolio in 2026

Core Insights - Portfolio diversification is essential in 2026 due to the concentration risk from the dominance of artificial intelligence investments in 2025 [1][2] Group 1: Importance of Diversification - The concentration risk from AI investments has made market portfolios less diversified across stocks, sectors, and themes [2] - Without smart diversification, portfolios that performed adequately in 2025 may become vulnerable in 2026 [1] Group 2: Rebalancing Strategies - Rebalancing is necessary to restore the original diversification levels; portfolios may now be overweight in US stocks compared to bonds [3] - A portfolio that initially had a 60% stock and 40% bond allocation could now exceed 80% in stocks due to lack of rebalancing [3] Group 3: International Exposure - Many portfolios may have lower exposure to international stocks than originally targeted, despite international stocks performing well in 2025 [4][7] - The long-term underperformance of international stocks compared to US stocks suggests potential for further gains [7] Group 4: Bond Allocation - Financial professionals recommend including bonds for diversification, especially for investors over 50 who should consider de-risking their portfolios [5][6] - A suggested bond allocation for retirement savers is 5% for those with 35-40 years until retirement, increasing to 20% as retirement approaches [5]