The 60/40 Portfolio Is Back — With a Twist
Why 60/40 Works Again
After the brutal 2022 where stocks and bonds fell together, the correlation between equities and fixed income has normalized. Bonds are once again providing diversification benefit — but only if you own the right bonds.
Our Recommended Allocation
| Asset Class | Traditional | Our Model | Rationale |
|---|---|---|---|
| US Large Cap | 35% | 20% | Concentration risk, high valuations |
| Int'l Developed | 10% | 20% | Cheaper, weaker dollar tailwind |
| Small/Mid Cap | 5% | 10% | Mean reversion from historic discount |
| EM Equity | 5% | 5% | Selective, China-light |
| Core Bonds | 30% | 15% | Duration risk at current yields |
| TIPS | 5% | 10% | Real yield attractive, inflation hedge |
| Commodities | 5% | 10% | Structural supply deficits |
| Alternatives | 5% | 10% | Uncorrelated returns |