Traditional portfolio diversification isn’t cutting it anymore. Here’s where to pivot, says this $624 billion fund manager.

Allspring Global Investments, which manages roughly $624 billion in assets, argues that conventional diversification—typically a mix of stocks and bonds—is no longer delivering the protective benefits investors have long relied on. In its view, portfolios built around that traditional split may be more correlated than many investors realize, particularly when stocks and bonds move in the same direction.

The firm's suggested pivot is toward liquid alternatives: strategies that can be bought and sold relatively easily, unlike traditional hedge funds or private-market vehicles that lock up capital for extended periods. These approaches are designed to pursue returns that don't move in lockstep with mainstream equities and fixed income.

For market observers, the takeaway is less about any single product and more about a broader shift in how diversification is being framed. What to watch: whether correlations between stocks and bonds stay elevated, how liquid alternative offerings evolve in cost and accessibility, and whether asset allocators meaningfully change their long-term portfolio construction as a result.