It is not safer for a portfolio to avoid all risky investments. Including some risky investments are better for the total portfolio than totally avoiding such investments. The impact of diversification is that some exposure to all types of individual investments, whether considered risky individually or not, actually reduces the volatility of the overall portfolio than when those individual types of investments are excluded. Diversification works because assets do not rise and fall at the same time or at the same rate, and the offsetting movements, combine to dampen the swings of total portfolio. Total portfolio volatility, and not individual asset investment risk or performance, is what is central, and diversification among all asset types is beneficial.
Bonds are safer than stocks only in certain limited circumstances.
While bonds are good investments for obligations that come due in a few years and are fixed in amount, stocks are safer than bonds to the extent that the obligations to be funded are sensitive to inflation and come due longer than 5 years in the future. Bonds, on the other hand, have produced much more volatile, and significantly lower, real returns. The total return of a portfolio measures its real performance, not the form of the returns. Overall, there will be realistic expectations as to what types of objectives are achievable, there will be understanding of the reason for temporary volatility, and, most important, there will be a concentration on the total portfolio, the asset allocation, and the behavior of the liabilities, rather than individual successes or individual failures. Therefore, our effort to realize return through active management or additional strategies is a secondary effort, and is directed toward simple fine-tuning of our basic investment structure.