Goldman Sachs Says You May Not Want Bonds in Next Market Cycle
- As Treasuries lose hedging power they may underperform cash
- But it’s not yet time to ditch 60/40 balanced portfolios: GS
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Investors may need more equities in their portfolios to generate positive returns thanks to misfiring bonds, according to Goldman Sachs Group Inc. strategists.
It might not be their base case just yet, but the strategists suggest a higher allocation to stocks and cash than the historic norm would be advisable in a world where Treasuries struggle to hedge market downturns. Strategists including Christian Mueller-Glissmann and Peter Oppenheimer even entertain a scenario where bonds prove so useless that an all-equity allocation would be preferable to balanced portfolios that invest 60% in shares and 40% in fixed income.