2017 had opened with a big bang for the local financial market. For the period of 3 January to 13 April, the Straits Times Index (STI) had taken a tremendous rise from 2887 points on 3 January to 3169.24 points on 13 April, with reaching a high of 3187.51 points just two weeks ago1; Gold had risen from USD 1158.84 to USD 1287.92 along the same timeframe2; Singapore REITs (S-REITs) had also gone up, with the FTSE REIT Index rising from 714.89 points to 765.43 points3. Even the ABF Singapore Bond Index Fund, one of the main indicators used for the local bond scene, displayed a miniscule rise from $1.135 to $1.1554. In fact, the phenomenon is shown at Bob’s Bedokian Portfolio (here), where you could see the rise of prices of the ETFs representing the various asset classes (except cash, which is not measured).
With all these happening, one question pops into most of our minds; are the asset classes really correlated to one another? Is diversification deemed as unnecessary?