The Old 60-40 Formula for Stocks and Bonds Has Run Into Trouble
- Sub-1% interest rates upend traditional portfolio allocation
- June flows into U.S. convertible-bond ETFs hit six-month high
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A precipitous slide in Treasury yields is calling into question one of the world’s most popular investment strategies.
The traditional asset mix of 60% stocks and 40% bonds, a starting point for investors since the proliferation of modern portfolio theory in the 1950s, has produced one of the best risk-adjusted returns of the past three decades, outshining debt alone. But with Treasury yields now hovering around zero, and likely to stay there for years, those gains are in doubt.