You can keep technology stocks in your portfolio while reducing reliance on AI-related companies and other concentrated exposures. Start with what you already own, look through funds to their underlying holdings, and decide whether to add exposure to other sectors, international markets, different investment styles, or fixed income. There is no single allocation that fits every investor; the right mix depends on your goals, time horizon, financial circumstances, and tolerance for losses.
Start with your portfolio’s actual exposures
Diversification depends on what your investments own and how those holdings may respond to market conditions—not on how many funds appear in an account. A broad U.S. stock-market fund can already have substantial technology exposure. Adding another technology-heavy or large-growth fund may increase overlap rather than spread risk.
The SEC’s Investor.gov guide to asset allocation and diversification cautions that a mutual fund or ETF is not necessarily diversified if it is narrowly focused on one industry. Review each fund’s current holdings and stated investment objective, then consider the combined exposure across your entire portfolio. Fund holdings change, so check current official fund documents rather than assuming the lineup is fixed.
Useful questions to ask include:
- How much of my stock exposure is in technology or AI-related businesses?
- Do different funds hold many of the same companies?
- Am I concentrated in U.S. stocks, large companies, or growth-oriented investments?
- What portion of my portfolio is in bonds or other asset categories?
These are ways to identify concentration, not a formula for a target allocation.
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Choose what kind of diversification you want
Diversification can mean spreading exposure across industries, regions, investment styles, and asset categories. You do not have to eliminate technology to add other sources of exposure. Consider each option in relation to your existing holdings and the role you want it to play.
Other industries
Adding companies from sectors outside technology can reduce reliance on one industry’s fortunes. But a sector fund may itself be concentrated, and owning several funds does not guarantee that their holdings or market drivers differ. Look at the underlying companies and consider how much of your portfolio remains tied to similar risks.
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International equities
Investments in companies outside the United States can broaden geographic exposure. They also bring country, regional, and currency risks, and their performance may not match U.S. stocks in a given period. Vanguard’s 2026 outlook, published December 10, 2025, identifies developed markets outside the U.S. as having a comparatively strong projected risk-return profile over five to ten years. That is Vanguard’s forecast, not a guarantee or an individualized recommendation.
Value-oriented equities
Value-oriented stocks can provide a different investment-style exposure from a portfolio tilted toward large growth companies. They are still stocks and can lose value; a change in style does not remove equity-market risk. Vanguard’s same outlook identifies U.S. value-oriented equities as having a comparatively strong projected risk-return profile over its five-to-ten-year forecast horizon.
High-quality fixed income
Bonds can add an asset category with a different role from stocks, though their risks vary by issuer, maturity, and other features. Vanguard’s 2026 outlook also identifies high-quality U.S. fixed income as having a comparatively strong projected risk-return profile over five to ten years. This is a hypothetical outlook, not a promised result.
For general guidance on diversification across industries, asset classes, and the role of correlation, see Vanguard’s portfolio diversification overview. Correlations can change, so a pairing that has behaved differently in the past is not assured to protect against losses in a particular downturn.
Compare choices by exposure, overlap, and fit
Before changing your portfolio, compare the role of a proposed investment with what you already own. This framework can help organize the decision:
- Exposure added: Does it add a different asset category, geography, industry, company-size range, or investment style?
- Overlap: Does it hold many of the same companies as your existing investments or depend on similar market drivers?
- Risk and role: What kind of volatility, income, or growth exposure are you adding, and how might it behave alongside the rest of the portfolio?
- Investor fit: Does the choice make sense for your objectives, time horizon, financial circumstances, and tolerance for losses?
- Implementation: Check current fund documents and account information for expenses, tax consequences, trading considerations, and account constraints.
The SEC’s Beginners’ Guide to Asset Allocation, Diversification, and Rebalancing explains diversification within and across asset categories. The categories above are options to assess, not a universal portfolio recipe.
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Set an allocation and review it over time
Once you have chosen an allocation that fits your circumstances, review it periodically. Market movements can change the proportions even when you make no trades. Investor.gov illustrates this with a hypothetical portfolio whose stock allocation rises from 60% to 80% after stock-market gains; those figures demonstrate drift, not a recommended allocation.
If your actual mix moves materially away from your chosen target, rebalancing is one way to bring it back in line. Rebalancing is an investor decision, and the appropriate method and timing depend on your circumstances and account. Before trading, consider the costs, taxes, and account rules that may apply.
What diversification can—and cannot—do
Spreading investments across holdings and asset categories can reduce dependence on a narrow group of companies or market drivers, but it cannot guarantee a profit or prevent a loss. A portfolio that retains technology stocks can still fall when technology shares decline; adding other exposures changes the concentration, not the existence of investment risk.
Vanguard’s outlook is a forecast by Vanguard Investment Strategy Group, not a certainty. Its projections are hypothetical, and its discussion of non-U.S. investments notes country, regional, and currency risks. No allocation can be selected responsibly from a single forecast alone.
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