Diversified Portfolio Outperformed Stocks in 2025: What Was The Mix?

A broadly diversified portfolio beat the US stock market in 2025, according to a new Morningstar report.

The research firm estimates a mix of 11 asset classes returned 18.3% for the year, outpacing the roughly 17% gain in US stocks. It also handily beat the classic 60/40 portfolio of stocks and bonds, which delivered 13.3%.

Top performers were gold, up nearly 70%, and non-US stocks, which surged more than 30%. A weak dollar boosted international returns.

Morningstar's model diversified portfolio consisted of: 20% large-cap US stocks, 10% developed market international stocks, 10% emerging market stocks, 10% US Treasuries, 10% US investment-grade bonds, 10% global bonds, 10% high-yield bonds, 5% small-cap stocks, 5% commodities, 5% gold, and 5% REITs.

Despite the strong one-year showing, the traditional 60/40 portfolio still leads over longer periods-averaging 15.4% annual return over three years versus 14% for the diversified mix. Experts warn complexity does not guarantee better outcomes.

Bonds also proved their hedging value in 2025, rising in 21 of the 25 weeks that stocks fell.

Morningstar strategists suggest average investors focus on non-US stocks and some bonds, rather than trying to replicate the full 11-asset model.