'Diworsification': the perils of diversifying across asset classes

Many have seen excellent returns in recent years, but the market could be about to turn against the diversifiers. Merryn Somerset-Webb looks at why holding everything from private equity to property is a risky strategy.

One of the investment world's great heroes is David Swensen, the man who has managed Yale University's endowment money since 1987. What makes him a hero? The fact that in all the years since he took over he has averaged a return of 16 per cent to 17 per cent a year with not one single down year.

That's something almost nobody else can lay claim to: there are managers knocking about who can say they've made similar average returns but they have usually resulted from performance extremes losing a lot some years but making much more in others.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.