July 20, 2024

Political Commentary

News Politics Business Sports

One of investing’s most reliable, highly-recommended strategies is up over 11% this year—so why do leading financial advisors still say they rarely use it?

2 min read

The most popular investing strategy in U.S. history made a comeback in 2023. After a carousel of articles labeled it “dead” due to years of underperformance, the vaunted “60-40” portfolio—which allocates 60% of its holdings to stocks and 40% to bonds—has returned more than 11% to investors so far this year. That’s nearly double its 6.4% average annual return between 2012 and 2022.

George Ball, chairman of the large private wealth manager Sanders Morris Harris, told Fortune last December that people would regret neglecting the old standby. “It was only recently when the death of the 60-40 [portfolio] was widely reported, and generally when you get that sort of headline it’s ill-timed and ill-advised,” he said in a prophetic interview.

So it appears the death of the 60-40 portfolio has been greatly exaggerated and retail investors can just lean into the old reliable option to make money moving forward, right? Well, not quite, because what is widely considered to be the most popular portfolio allocation—the 60% equity, 40% fixed income split—isn’t actually used by most financial advisors.

Here are a few of the misconceptions about the most tried and true investing play in the book—and a few options to help investors make their portfolios look more like the professionals’.

Why the 60-40 is back

For the better part of a dozen years, dating back to the Global Financial Crisis, near-zero interest rates crippled the heavy bond holdings of the classic 60-40 portfolio, making equity-focused options more appealing. This came to be called the “free money” era, and some argue it birthed not just historic stock market gains, but an “everything bubble.” 

It was a rough period for the 60-40 portfolio when more equity-focused options outperformed. But now, after more than 20 months of interest-rate hikes from the Federal Reserve, bonds are paying a solid real yield. This new period of higher interest rates is likely to…

Will Daniel

2023-11-25 07:00:00

All news and articles are copyrighted to the respective authors and/or News Broadcasters. VIXC.Com is an independent Online News Aggregator


Read more from original source here…

Leave a Reply

Copyright © All rights reserved. | Newsphere by AF themes.