Investing strategies
2023 reading list: From 60/40 to securities lending
December 28, 2023
As 2023 winds down, we’re looking back at some of our more popular and enduring investing topics of the year. The 60/40 portfolio sparked a lot of conversation, as did the impact of rising bond yields on retirement portfolios. Our approach to securities lending also resonated with readers.
The improved outlook for the 60/40 portfolio
Not every year works out positively for investors holding a balanced portfolio of 60% stocks and 40% bonds, but the strategy has a stellar long-term record. After a bad year in 2022, expected 10-year returns for a 60/40 mix moved higher, according to Vanguard researchers. And our 2024 economic and market outlook says the case “has strengthened.”
The top three misconceptions about the 60/40 portfolio
The 60/40 portfolio is not a one-size-fits-all approach, Vanguard researchers say. It’s also not so rigid that it can’t be customized to suit individual needs and preferences. And investors who use the 60/40 strategy should review their portfolio periodically to make sure the allocation is still right for their circumstances.
Why higher yields may be good for many retirement investors
A rising interest-rate environment can be unsettling, especially for investors nearing or in retirement who see the value of their fixed income portfolios declining. But Vanguard researchers argue that increased yields likely bode well for such investors over the long term.
A client-centric approach to securities lending
The practice of asset managers lending securities from portfolios to banks and broker-dealers can generate additional income for fund investors. Rodney Comegys, global head of Vanguard Equity Investment Group, explains how Vanguard’s investor-centric, risk-conscious, and value-based approach to lending securities serves as a differentiator in the industry.
Related links:
- Vanguard economic and market outlook for 2024: A return to sound money (24-page PDF, issued December 2023)
- Default factor is a key differentiator for bond funds (article, issued November 2023)
- Active Fixed Income Perspectives Q4 2023: A new era (article, issued October 2023)
Notes:
All investing is subject to risk, including possible loss of principal. Diversification does not ensure a profit or protect against a loss.
Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.
Investments in bonds are subject to interest rate, credit, and inflation risk.
Investments in stocks or bonds issued by non-U.S. companies are subject to risks including country/regional risk, which is the chance that political upheaval, financial troubles, or natural disasters will adversely affect the value of securities issued by companies in foreign countries or regions; and currency risk, which is the chance that the value of a foreign investment, measured in U.S. dollars, will decrease because of unfavorable changes in currency exchange rates.
We recommend that you consult a tax or financial advisor about your individual situation.
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