Will the popular 60/40 investment strategy that has delivered better returns than the S&P 500 index over the long term…

Supporters of the 60/40 style portfolio split, which aims to benefit from growth in equities while providing investors with downside protection in bonds, have noted that this investment strategy has collapsed very quickly this year. This article therefore aims to answer whether this is a permanent change or whether the performance of the 60/40 investment strategy will return to its long-term trend.

What is a 60/40 portfolio

For many years, a large percentage of financial advisors and securities traders created portfolios for their clients that consisted of 60% stocks and 40% bonds or other fixed income offerings. And these so-called balanced portfolios did quite well during the 1980s and 1990s.

How did such a portfolio perform in 2022

This year, however, investors have been surprised by the inability of bonds to act as a hedge against stock market declines. This was front and center in the third quarter, when a portfolio of 60% stocks and 40% bonds posted…