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Investors Rethink ‘60/40’ as Low Bond Yields Test Portfolios

  • Traditional portfolio blend of equities and bonds in question
  • Strategists consider cash, credit, gold and dividend shares
Russian Gold Bar Production At Ural Mining And Metallurgical Co.
Photographer: Andrey Rudakov/Bloomberg
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The staple U.S. portfolio of 60% equities and 40% fixed income proved resilient this year, but strategists are now considering alternatives to government debt after some bond yields reached historic lows.

Sanford C. Bernstein recommends taking more risk by favoring stocks and gold, and argues the negative correlation between equities and fixed income is likely to unwind. Morgan Stanley said corporate bonds may be the best alternative to sovereign notes for curbing portfolio volatility and providing a level of income.