Skip to Main Content

Is It Time To Adjust the 60/40 Portfolio? | Advisor's Edge

Joseph Anthony - Feb 09, 2021
Darcie was pleased to have been invited to share her thoughts given her expertise in alternative strategies. Below, please see a few of her quotes regarding a more modern approach to asset allocation in the wake of negative real rates:

By: Mark Burgess | February 5, 2021

 

“The traditional 60/40 portfolio served investors well in 2020. Government bonds provided reliable ballast early in the year when equity markets tanked in response to the Covid-19 pandemic.”

 

In this article, Mark Burgess explores the hard truth – that as we shift towards global recovery, many investors worry that this performance cannot be repeated. “Interest rates are expected to remain near zero for several years, which means replicating the benefit from government bonds would require negative rates from the U.S. Federal Reserve and Bank of Canada.”

 

Mark notes that the traditional portfolio has reached an inflection point, and discusses how to reposition portfolios for “investors [who] won’t accept negative real returns for such a large portion of their portfolios.”

 

Darcie was pleased to have been invited to share her thoughts given her expertise in alternative strategies. Below, please see a few of her quotes regarding a more modern approach to asset allocation in the wake of negative real rates:

 

 [Private Debt] “There’s virtually no correlation to equity markets, so it is a diversified asset class that can reduce the volatility in your overall portfolio”

[Real Estate] “Real estate funds provide an inflation hedge” she said “which is import given the massive amount of recent stimulus from governments”

[Other Alternative Strategies] Crowe also uses hedged credit strategies that can go long and short on bonds, essentially hedging the interest rate risk. “It’s designed to protect against capital losses from rising interest rates” she said.

 

 

To read the full article, please visit: https://www.advisor.ca/investments/market-insights/is-it-time-to-adjust-the-60-40-portfolio/