BlackRock warns of a 'diversification mirage' as classic hedges fail

The BlackRock Investment Institute warns of a “diversification mirage,” saying traditional hedges such as bonds and gold have not reliably protected portfolios during recent market stress. The note signals investors should rethink reliance on classic safe havens and consider alternative hedging or diversification approaches, which could pressure flows into conventional hedge vehicles. The commentary raises the prospect of portfolio rebalancing, potential shifts toward alternative assets or strategies, and greater scrutiny of fixed-income and gold allocations as risk-management tools heading into uncertain markets.