The Advantages of Keeping a Diversified Portfolio

A simple, effective strategy to work toward balancing risk and potential return.

 

Whether your financial goals are to build wealth, retire, send a child to college, or provide for your family, allocating your assets across the major asset classes — stocks, bonds, international securities, and cash — may help you pursue the best possible return on your investments according to your tolerance for risk and time horizon.

How you diversify within each asset class can be equally important to your investment success over time. Spreading your holdings among different industries, geographies, companies, and investment styles may be the best way to reduce your exposure to the downside risks of individual portfolio holdings.

While not always easy, staying goal focused, well diversified, and committed to your plan are all keys to working toward successful long-term investing.

Plan to pursue success

Because of the inevitable volatile markets investors encounter when pursuing long-term financial goals, having a portfolio of well-diversified holdings may start you on the right track toward keeping those goals intact.

Working together, you and your financial advisor can create a diversified portfolio and follow a disciplined plan that puts you in position to

  • pursue the highest potential return for a certain level of risk over a certain amount of time
  • aim to reduce exposure to the downside risks of individual holdings
  • stay on track through market cycles and over time

Also, remember that as markets rise and fall, the percentages you have allocated to specific asset classes can shift, making your portfolio riskier or more conservative than you intend it to be. Make sure to review your portfolio periodically with your financial advisor and rebalance your holdings when necessary to maintain your desired allocation.

THE VALUE OF ADVICE

An experienced financial advisor — who knows your goals, temperament for risk, time horizon, and total holdings — could be your most valuable asset in any market environment and over time. He or she can help you determine your overall comfort level with risk, allocate and diversify your assets accordingly, and draw up a plan for pursuing your long-term financial goals.

Hypothetical examples are for illustrative purposes only and are not intended to represent the future performance of any MFS® product.

Past performance is no guarantee of future results.

 For purposes of this comparison, we have divided the overall market into the following eight indices — the Bloomberg Barclays U.S. Aggregate Bond Index measures the U.S. bond market. The MSCI EAFE Index measures the non-U.S. stock market. The Russell 1000® Growth Index measures large-cap U.S. growth stocks. The Russell 1000® Value Index measures large-cap U.S. value stocks. The Russell 2500 Index measures U.S. small- and mid-cap stocks. The FTSE NAREIT All REITs Total Return Index tracks the performance of commercial real estate across the U.S. economy. The JPMorgan Global Government Bond Index (Unhedged) measures government bond markets around the world. The Bloomberg Commodity Index is composed of futures contracts on physical commodities. Index performance does not reflect the deduction of any investment-related fees and expenses. It is not possible to invest directly in an index.

Keep in mind that no investment strategy, including diversification, can guarantee a profit or protect against a loss. Also, all investments carry a certain amount of risk including the possible loss of the principal amount invested.


Issued in the United States by MFS Institutional Advisors, Inc. (“MFSI”) and MFS Investment Management. Issued in Canada by MFS Investment Management Canada Limited. No securities commission or similar regulatory authority in Canada has reviewed this communication. Issued in the United Kingdom by MFS International (U.K.) Limited (“MIL UK”), a private limited company registered in England and Wales with the company number 03062718, and authorised and regulated in the conduct of investment business by the UK Financial Conduct Authority. MIL UK, an indirect subsidiary of MFS, has its registered office at One Carter Lane, London, EC4V 5ER and provides products and investment services to institutional investors globally. This material shall not be circulated or distributed to any person other than to professional investors (as permitted by local regulations) and should not be relied upon or distributed to persons where such reliance or distribution would be contrary to local regulation. Issued in Hong Kong by MFS International (Hong Kong) Limited (“MIL HK”), a private limited company licensed and regulated by the Hong Kong Securities and Futures Commission (the “SFC”). MIL HK is a wholly-owned, indirect subsidiary of Massachusetts Financial Services Company, a US based investment adviser and fund sponsor registered with the US Securities and Exchange Commission. MIL HK is approved to engage in dealing in securities and asset management regulated activities and may provide certain investment services to “professional investors” as defined in the Securities and Futures Ordinance (“SFO”). Issued in Singapore by MFS International Singapore Pte. Ltd., a private limited company registered in Singapore with the company number 201228809M, and further licensed and regulated by the Monetary Authority of Singapore. Issued in Latin America by MFS International Ltd. For investors in Australia: MFSI and MIL UK are exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 in respect of the financial services they provide to Australian wholesale investors. MFS International Australia Pty Ltd (“ MFS Australia”) holds an Australian financial services licence number 485343. In Australia and New Zealand: MFSI is regulated by the US Securities & Exchange Commission under US laws and MIL UK is regulated by the UK Financial Conduct Authority under UK laws, which differ from Australian and New Zealand laws. MFS Australia is regulated by the Australian Securities and Investments Commission.


MFS Fund Distributors, Inc.,MFSE-TALE3-FLY-2/17,16060.14

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