Diversification hasn’t disappeared. It’s evolving.

Diversification has long relied on bonds offsetting equity risk. That relationship is proving less reliable, with recent shocks exposing how quickly correlations can move together. These periods tend to emerge when inflation is more volatile, as it is today. At the same time, markets are being driven by a different force, an investment-led cycle tied to AI and infrastructure, which is supporting earnings despite the noise. In this episode, Matt Quaife sits down with Lukasz to discuss why diversification is behaving differently, what this means for portfolio construction, and why these periods are among the most challenging, but also the most important, for long-term outcomes. Topics covered: The market impact of the Iran conflict and energy shock Why bonds and equities are moving together What’s driving the current investment-led cycle How to think about diversification in a higher inflation world Where opportunities are emerging across regions and sectors Portfolio construction when correlations break down For more information on Fidelity visit fidelity.com.au. Read our full disclaimer. This episode was recorded 19 May 2026 See omnystudio.com/listener for privacy information.