The 60/40 strategy that got a drubbing in 2022 is still not worth investors' time, argues the world's biggest asset manager.
The 60/40 portfolio is no longer in favor at the world’s largest asset manager, where strategists say they are tearing up the playbook to help build more resiliency for investors.
“Those... The 60/40 portfolio is no longer in favor at the world’s largest asset manager, where strategists say they are tearing up the playbook to help build more resiliency for investors. “Those used to work when both assets trended up and bonds offset equity slides. We think a focus on any one asset allocation mix misses the point: A regime of higher volatility with sticky inflation needs a new approach to building tactical and structural portfolios,” said a team led by Jean Boivin, head of BlackRock Investment Institute, the research unit of the money manager.
As for their new playbook, the BlackRock team is avoiding broad allocations. For example, they find short-term bonds appealing on their view that the Federal Reserve is unlikely to cut rates or return to a historically low rate environment. They are overweight inflation-linked bonds on both strategic and tactical horizons given they see inflation as sticky.
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