- According to a recent MLIV Pulse survey, on average 2 out of every 3 investors still believe a standard 60/40 stock-bond portfolio allocation will beat inflation in the long run.
- On average, investors holding on to a standard 60/40 portfolio mix are down about 10% this year alone, putting such portfolios on track for their steepest losses since the 2008 Financial Crisis.
A portfolio strategy that has survived over three decades can’t really be dead can it? At least not according to a recent MLIV Pulse survey which found that on average, 2 out of every 3 investors still believe a standard 60/40 stock-bond portfolio allocation will beat inflation in the long run.
Investors hewing to a standard 60% equities and 40% bond portfolio have been hammered since last November, as the prospect of rising interest rates and soaring inflation dealt a double-whammy to portfolios structured in that most traditional manner.
Far from diversifying their portfolios and reducing volatility, bonds and stocks moved in virtual lockstep as soaring inflation and rising interest rates have caused traditionally negative correlations to break down.
Typically, stocks move opposite to bonds, but the past several years has upended such long held assumptions.
When central banks cut borrowing costs and flooded markets with liquidity, stocks moved upwards along with bonds, as yields became depressed.
And when the U.S. Federal Reserve reversed policies and raised interest rates, both stocks and bonds were hammered.
On average, investors holding on to a standard 60/40 portfolio mix are down about 10% this year alone, putting such portfolios on track for their steepest losses since the 2008 Financial Crisis.
If it’s any comfort, soaring inflation and central bank policy uncertainty has made losers of practically every investment and portfolio allocation strategy, from Bitcoin, once touted as an inflation hedge, to once high-flying tech stocks.
As a result, investors are more or less doubling down on their existing investment strategies, riding out the volatility and waiting out a better time.
