Old-School Wall Street Thrives in 2025 Amid AI Hype, Investors Still Shun Diversification

• Diversified strategies (stocks/bonds, multi-asset quant cocktails) posted strongest returns in years in 2025, often outperforming S&P 500.
• This success was largely overshadowed by intense focus on AI and concentrated tech investments.
• Softer US inflation data highlighted the wisdom of balanced portfolios, leading to gains for risk parity funds.
• Despite strong performance, investors continue to abandon diversified funds, favoring concentrated Big Tech and thematic trades.
• Strategists predict a continued market broadening in 2026, with value, international, and small caps performing well.

Why It Matters: Diversified strategies quietly excelled in 2025, but investors still chase AI, ignoring balanced returns.