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Large U.S. companies outperformed other investments over the last 20 years—but you should still diversify, pros say

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Large U.S. stocks have the highest return of any asset class over the past two decades with moderate risk. But investing pros still think you should diversify.

Investing professionals are constantly thinking about two factors when building portfolios: risk and return.

While most asset classes follow the risk/return rules, a couple notable outliers emerge. Commodities, despite being one of the jumpier asset classes, offer the weakest 20-year return at 0.73%. You'd haveThe other standout is an investor favorite: U.S. large-company stocks — you know, the stuff that popular indexes such as the S&P 500 are made of. No asset class performed better over the past two decades than U.S. large-cap's 9.

That means while the S&P 500 may have cleaned up against other stock indexes of late, that may not be the case between now and the time you retire. For long-term investors, he says, "nibbling at small- and mid-cap stocks as well as international investments might be a good thing."

 

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