The Passive 60/40 Portfolio Is Broken - Do This Instead

Summary

  • The 60/40 portfolio is experiencing its worst year of returns since the Great Depression. Outside the Great Depression, this is its worst year ever.
  • Interest rates may drop again, but they are already historically low, casting doubt on the future efficacy of the 60/40 portfolio.
  • Too many investors are pouring more and more money into passive funds.
  • We suggest an alternative to diversify away from portfolios made up only of traditional stocks and bonds.
  • We're currently running a sale at my private investing ideas service, High Yield Investor, where members get access to portfolios, market alerts, real-time chat, and more. Learn More »

Portfolio management and asset allocation concept : Dollar bag, financial products on balance scale e.g ETFs, REITs, stocks, commodities, bonds, mutual funds, depicts balancing between risk and return

William_Potter

Co-produced by Austin Rogers for High Yield Investor

The 60/40 portfolio may have reached the end of its useful life as an investment strategy.

The whole idea behind passively holding a portfolio of 60% stocks and 40% bonds, usually through one

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Data by YCharts

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Data by YCharts

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Michael Batnick

60/40 portfolio performance

Michael Batnick

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Data by YCharts

passive vs active

Financial Times

Tiger 21 asset allocation

Tiger 21

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Data by YCharts

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Data by YCharts

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This article was written by

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