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, is signaling that the classic stock-and-bond mix may no longer deliver the diversification investors have long relied on. The firm's argument centers on a familiar problem: when traditional asset classes move together, the cushion that bonds once provided can disappear.

Its proposed answer is greater use of liquid alternatives — strategies that aim to generate returns less tied to broad equity and bond markets, while still offering the ability to trade in and out relatively easily, unlike traditional hedge funds or private vehicles with long lock-up periods.

For markets, the takeaway is less about any single trade than about a broader shift in how large allocators think about risk. If more institutional money follows this logic, flows into these strategies could grow, potentially influencing liquidity and pricing across related funds. What to watch: whether other major managers echo the view, and whether performance data actually supports the claim that liquid alternatives diversify when it matters most.