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Death of 60/40 Portfolio Makes Returns Harder for Funds

  • Singapore, Australia sovereign funds say bond buffer is gone
  • Future Fund head Brake sees more ‘fragility’ in markets
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WATCH: Lim Chow Kiat the CEO of Singapore's sovereign wealth fund GIC, says the upward trend of bond yields may continue.(Source: Bloomberg)
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Two of the world’s largest sovereign wealth funds say investors should expect much lower returns going forward in part because the typical balanced portfolio of 60/40 stocks and bonds no longer works as well in the current rate environment.

Singapore’s GIC Pte and Australia’s Future Fund said global investors have relied on the bond market to simultaneously juice returns for decades, while adding a buffer to their portfolio against equity market risks. Those days are gone with yields largely rising.