Is the 60/40 Dead Or Just Playing Possum?

Reports of the 60/40’s death are greatly exaggerated. (Dreamstime)

The 60/40 portfolio has been the subject of much hand-wringing in recent years. The foundation of many retirement investments, the mix took a beating in 2022 when stocks and bonds tanked together. Since then, the angst has been existential, with some experts continuing to argue that the 60/40 is dead.

Some concern is warranted. The 60/40 rests on the premise that stocks and bonds are non-correlated assets–that is, they tend to move in opposite directions, providing stability to portfolios that can’t afford lots of risk. The year 2022 shook that premise to the core, as the average 60/40 portfolio lost 14%.

Conditions are again conspiring toward correlation, Torsten Sløk, Apollo Global Management’s chief economist, wrote in a recent note. He called the 60/40 “broken” due to today’s dominant market forces: AI concentration is driving stocks, while fiscal constraints are driving bonds. “With the AI trade slowing down and government debt projected to reach 175% of GDP, neither the 60 nor the 40 responds to what made it work in the first place,” he wrote. His brief note doesn’t go into solutions, but Apollo is an alternative asset manager and proponent of private assets in retirement portfolios.

Vanguard has also sounded a cautionary note, citing the roughly $132 billion of debt that the AI hyperscalers have issued so far this year, with hundreds of billions more to come. Technology’s share of the investment-grade bond market, once small, is growing. “[AI] concentration, long an equity-market phenomenon, is migrating into the asset class many investors hold as a diversifier,” Lucas Baynes, Vanguard senior investment strategist, wrote.

What’s an investor to do? According to Vanguard, the solution is “unglamorous”: Know what you own. If you have heavy AI exposure in your stock portfolio, know that you have some AI in your core bond fund as well. Don’t rely solely on corporate issuance–make sure you have Treasurys and hedged international bonds in your mix.

The firms talking the loudest about the 60/40’s demise may be the ones peddling pricey alternatives. Take their commentary with a grain of salt.

the full story…

Barron’s Latest

The 60/40 Is ‘Broken.’ Here’s How to Fix It.

The classic portfolio needs a rethink in light of current market dynamics, a prominent strategist argues.

Own Too Much Nvidia? How to Deal With Capital Gains.

As advisors love to say, don’t let the tax tail wag the investment dog.

How Much You Could Save If Trump Changes the Capital Gains Tax

A proposal would index capital gains for inflation.

Inflation and Taxes Are Eating Into Your Savings. What You Can Do About It.

Real estate and oil-and-gas pipelines are one option, writes Barron’s Randall W. Forsyth.

More Barron’s Retirement Coverage

What We’re Reading

Soon You Can Buy Medicare Advantage Plans at Costco. Here’s What to Know. (MarketWatch)

The partnership comes as other Advantage providers are exiting markets.

Matt Damon on Pack Pain Filming “The Odyssey” (AARP)

The summer blockbuster’s star discussed what interventions helped the middle-aged actors cope with pain from the grueling shoot.

Resources

Social Security

Medicare

Taking the Mystery Out of Retirement Planning

Copyright ©2026 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8