{"id":11008,"date":"2023-11-08T09:03:47","date_gmt":"2023-11-08T09:03:47","guid":{"rendered":"https:\/\/infundpros.com\/markets\/the-60-40-stock-bond-portfolio-appears-to-be-broken-heres-how-it-could-change\/"},"modified":"2023-11-08T09:03:48","modified_gmt":"2023-11-08T09:03:48","slug":"the-60-40-stock-bond-portfolio-appears-to-be-broken-heres-how-it-could-change","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=11008","title":{"rendered":"The 60\/40 stock-bond portfolio appears to be broken. Here\u2019s how it could change."},"content":{"rendered":"
\n

The classic 60\/40 portfolio, which consists of 60% bonds and 40% stocks, hasn\u2019t performed well in the past few months, with the two assets mostly posting a positive correlation and investors worrying the Federal Reserve may keep interest rates higher for longer.<\/p>\n

The S&P 500
\n SPX
\n has lost 3% for the past three months, while the 10-year Treasury
\n BX:TMUBMUSD10Y
\n yield added about 53.9 basis points during the same period, according to FactSet data. Bond yields and prices move in opposite directions.\u00a0<\/p>\n

\n

For stocks and bonds to post a negative correlation again, there has to be a change in the inflation regime, Alexandra Wilson-Elizondo, the head of multi-asset funds and model portfolio management at Goldman Sachs
\n GS,
\n +0.01%<\/bg-quote>,<\/span>
\n said in a roundtable discussion held by the bank.\u00a0<\/p>\n

\u201cWe do agree that you\u2019re going to continue to see that disinflationary trend, which could take a little bit longer than expected, but ultimately, we should get down to that 2% [interest-rate] target with the current level of rates that we\u2019re seeing,\u201d said Wilson-Elizondo.\u00a0<\/p>\n

Still, the Treasury markets have been mostly driven by a large amount of leverage, which primarily comes from the U.S. federal deficit, Wilson-Elizondo noted. \u201cEvery time you see large funding announcements or expectations of issuance, it makes it very hard for the rate market to rally even with the disinflationary trend,\u201d she said.\u00a0<\/p>\n

Investors have to watch a large election cycle across different economies to look for signs of changes, according to Wilson-Elizondo. \u201cUltimately, we do expect in particular the front end of the curve to perform quite well in a selloff,\u201d she added.\u00a0<\/p>\n

Investors should also look at other assets, such as gold and commodities, for diversification and risk-management purposes, the analyst noted.\u00a0<\/p>\n

U.S. stocks ended Tuesday higher, with the Dow Jones Industrial Average
\n DJIA
\n up 0.2%. The S&P 500 rose 0.3% and the Nasdaq Composite
\n COMP
\n gained 0.9%, according to FactSet data.<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The classic 60\/40 portfolio, which consists of 60% bonds and 40% stocks, hasn\u2019t performed well in the past few months, with the…<\/p>\n","protected":false},"author":1,"featured_media":11009,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25],"tags":[],"class_list":{"0":"post-11008","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets"},"yoast_head":"\nThe 60\/40 stock-bond portfolio appears to be broken. 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