That said, he will tilt for style. "Look, we might have a more quality bias, but if we become more concerned about the world, then what we want in that instance is to have more allocation to quality."
So should investors have a third of each: quality, growth and value? No, he says: always have a larger allocation to quality.
Similarly, currency diversification seems to have become more important, especially so as in Post-Brexit Britain, sterling has become even more volatile against the dollar.
Hassan prefers unhedged currency exposure to US securities, as it helps diversify currency risk.
He explains: "In our equity allocations we have more dollar exposure than we did in 2022. There is a flight to safety and this is where dollar exposure does better."
Also, do not forget liquidity. According to Hassan, investing in high-growth, cyclical things – like smaller companies, or anything that requires leverage – or illiquid assets such as property, could cause pain.
He says: "You need to understand that liquidity of underlying investments is important. You either need to avoid them or position them appropriately."
Renzi-Ricci says true diversification is "almost always a fairly academic idea. You want it to reflect all the securities available, liquid or illiquid, and apply any lenses – factors, geography or asset class.
"But that's just theory. In a world that is evermore subject to geopolitical and idiosyncratic risks, you need to consider all the possible paths that are in front of you."
Diversification is therefore not simply having a bit of everything all the time; over-diversification simply erodes returns and escalates costs.
As Hassan says: "You can't just buy everything, but diversification helps you from making mistakes you can't claw your way back from."
This is why managers like to structure their funds with an emphasis on what they and their investment teams think will deliver over the longer term, within the required risk parameters.
Managing diversified portfolios
When it comes to monitoring portfolios, some institutional and retail investors may be more inclined to make short-term tactical allocations.
Hoppe says the pandemic taught us that "we can’t reply on pre-determined game-plans or diversification strategies, but need to be nimble in responding to developments in real-time".
Being nimble is to be applauded, giving managers and investors the benefit of tactical allocations when the next global shock comes.
But having a proper strategic, long-term plan in place is important for portfolio management.
Renzi-Ricci adds: "Look at how quickly central banks acted in Covid, or consider the recent swift repricing of bonds. Timing over the course of two months is difficult, even for professional financial advisers.
"In such situations, amid volatile markets, even central bankers rely less and less on forward guidance. They're 'now-casting', rather than forecasting."
