Is the 60/40 Portfolio Dead or Just Dazed?

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… (View PDF)