Diversification is often referred to as the only free lunch in investing. Marina Gross, executive vice president at Natixis Global Asset Management, said spreading out your assets is now more important than ever due to years of central bank experimentation. According to Gross, advisor portfolios with the highest level of diversification have had the best return over the last year (7%), compared with the 2.6% return of the least diversified, over a period marked by three major market sells offs. Although portfolios have become more diversified, on average they still contain about 60% equities, and that 60% is driving 93% of the portfolios' risk. Meanwhile, alternatives are working. In the last three years, portfolios analyzed by Marina Gross' team have doubled their allocation to alternatives - and diversified the number and types of alternatives they use. Portfolios with 10% or more in alternatives have higher risk-adjusted returns than others in the last four years.