Doesn't diversification lower returns?

A diversified portfolio's return is lower than if you had invested only in the single best-performing asset, but higher than if you had invested only in the worst.

Since you cannot know in advance which asset will do best, diversification narrows the range of possible outcomes and helps you avoid extreme ones. In other words, diversification does not necessarily raise or lower expected returns; it is a way of reducing the dispersion of outcomes.