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Special Report

Your 2023 Portfolio Checkup

How to position your investments in the new year after a challenging 2022.

Last year was a rough one for investors, as rising interest rates and high inflation knocked both stocks and bonds for a loop. The 60% equity/40% bond portfolio, the oft-cited simple diversification model for maximizing risk-adjusted returns, posted double-digit losses for the year. Moreover, many other widely held asset classes—international stocks and real estate among them—lost money last year, too. The bright spots in 2022: Gold was about flat, cash eked out positive returns, and commodities soared.

Given such across-the-board losses among the major asset classes, is the concept of diversification dead? And if it is, how in the world should investors think about their portfolios in 2023?

One bad year in the markets is no reason to throw in the towel on the concept of diversification.

“I like to think of diversification as an insurance policy,” says Morningstar portfolio strategist Amy Arnott. “It’s something that you have in case something goes wrong, and it doesn’t always pay off. It’s something that you have to pay for. And in some years, there may be only a small benefit, like there was [in 2022], but even if it’s a small benefit, it’s better than nothing. So, I think, diversification is still a sound strategy and something that people should aim for when they’re putting together their portfolios.”

Now is therefore a good time to revisit your portfolio’s diversification, as part of a broader tuneup for 2023. What else should investors consider when conducting an annual portfolio review? Confirming that you’re on track to meet your goals and determining whether your liquid reserves are sufficient are places to start, says Morningstar director of personal finance and retirement planning Christine Benz.

A Year-End Portfolio Review in 7 Easy Steps

Morningstar’s Christine Benz shows investors how to check up on a portfolio’s health—and that of a whole plan—in the new year.

Top 6 Portfolio Moves for 2023

While the market environment remains uncertain, there are a few key changes worth considering, says Morningstar’s Amy Arnott.

In this special report, we’ve pulled together some best practices when conducting portfolio review—including how to align your asset mix to your goals and how to really diversify your holdings. We also cover strategies for simplifying your portfolio in the new year and, for opportunity-seekers, ideas for how to tilt your portfolio in 2023.

Asset Class and Diversification Considerations

Pre-Retirees: Is Your Asset Allocation Too Aggressive?

How to determine whether your asset mix is out of whack, your overall portfolio diversification is lacking, or you own too many investments.

Is Your Portfolio Diversified Enough?

For many investors, the answer is no. Here’s how to fix it.

Can the 60/40 Portfolio Bounce Back in 2023?

Performance probably can’t get much worse than it was in 2022.

The Best Funds for Rebalancing in 2023

These top-rated ETFs and mutual funds can bring balance to portfolios with off-kilter asset allocations.

Why Bonds Should Still Play a Role in Your Portfolio

Even during periods of rising interest rates, they can still help control risk.

Where to Invest in 2023

2023 Stock Market Outlook: Near-Term Turbulence, but Clearer Skies Ahead

Stocks are trading at a deep discount but need evidence of long-term economic rebound and moderating inflation to rally back to fair value.

Where to Invest in Bonds in 2023

After investors suffered their worst losses ever in 2022, bond returns are poised to rebound this year.

Contrarian Picks for 2023 and Beyond

There are likely some future winners in these out-of-favor growth and fixed-income funds.

3 Great ETFs for 2023 and Beyond

Investors don’t have to give up long-term performance to manage current risks.

The Best Bond Funds

These exchange-traded funds and mutual funds earn Morningstar’s top rating.

The Best International Stock Funds

These international mutual funds and ETFs all earn Morningstar Analyst Ratings of Gold.

Best Companies to Own: 2023 Edition

These companies stand out from the competition and can be good choices for long-term investing.

Ways to Simplify Your Investment Portfolio

3 Ways to Simplify Your Investment Portfolio in 2023

Here are some easy investing strategies for those resolved to streamline their portfolios in the new year.

4 Ways to Uncomplicate Your Retirement Portfolio

Retirement planning is complicated. Your retirement portfolio shouldn’t be.

How to Build a Portfolio You Don’t Need to Babysit

These four steps can help you craft a (mostly) hands-off portfolio.

Do You Own Too Many Investments?

Holding too many investments across too many accounts can obscure the big picture.

The Best Index Funds

These passive ETFs and mutual funds across a variety of categories earn Morningstar’s top rating.

How to Position Your Portfolio In Retirement

A Retirement Readiness Checklist

Evaluating your retirement plan can be more manageable if you break it into smaller steps.

The Bucket Approach to Building a Retirement Portfolio

A diversified portfolio with various time frames can help you meet your income needs during retirement.

What’s a Safe Withdrawal Rate Today?

What declining stock and bond prices and higher inflation mean for retirement income.

How Worried Should New Retirees Be About Market Losses and High Inflation?

Sequence-of-returns risk can leave even the best-laid retirement plans in tatters. Here’s what to do about it.

More

4 Portfolio Lessons From 2022

Here are some key takeaways for investors after a tough year for most markets.

5 Tips for Managing Your Portfolio and Sustainability in 2023

Recommit to diversification with ESG funds and start thinking about your retirement plan.

Tailoring Your Portfolio When One Size Doesn’t Fit All

8 scenarios where you may need to tweak your portfolio.

Which Investments to Keep Out of Your Taxable Account

Sizable mutual fund capital gains distributions illustrate a simple fact: Some investments are structurally a poor fit for taxable accounts.

How to Roll Over an Old 401(k)

Is deciding what to do with an orphan 401(k) on your to-do list? Here are seven steps for getting it done.