• 2022 has dealt a blow to the 60/40 portfolio. While losses in a 60/40 portfolio are not unusual, losses in stocks and bonds simultaneously are unusual.
• Since 1928, with nearly 100 years of track record, the 60/40 portfolio has never had a negative return in any 10-year period.
• Diversification benefits of a 60/40 portfolio are not dead, even if they are not working right now. Today’s dislocations also offer opportunities for investors going forward.
2022 has been a tough year for both stocks and bonds. This synchronized selloff in stocks and bonds has dealt a blow to one of the most popular strategies for long-term investors: the 60/40 portfolio.1 This portfolio is a mix of 60% stocks and 40% bonds. The popularity behind the 60/40 portfolio stems from the key principle of diversification to seek growth potential from stocks while adding protection from conservative bonds for a more stable outcome over the long term.
Through the end of September 30, 2022, this portfolio using 60% in S&P 500 index and 40% in Bloomberg US Aggregate Bond Index, the most commonly used bond index, is down roughly 20%.2 With such a devasting year, we explore if this is normal, just how bad it can get, and what’s next for investors.
Please continue reading by clicking on the following link: Is the 60/40 Portfolio Dead or Just Dazed?
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