Last year, the stalwart 60/40 portfolio tanked 17%, its worst performance since 2008, with both stocks and bonds declining in tandem.
While a typical 60/40 portfolio — 60% in stocks and 40% in bonds — is up roughly 6% this year, according to Vanguard data, many portfolio managers are losing faith in it, The Wall Street Journal reports.
There are three main reasons for their fear. First is the fast rate at which the Federal Reserve began raising interest rates from near zero in March 2022 to today’s 5.25% - 5.50% range. The third reason confidence in the 60/40 blueprint is being shaken is government spending has surged since the pandemic, increasing the supply of Treasury bonds to levels that Wall Street investors are not sure the government can handle.
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