Expert insight

Like the phoenix, the 60/40 portfolio will rise again

June 08, 2022

Roger Aliaga-Díaz, Vanguard Americas Chief Economist

Vanguard Chief Economist, Americas, and Head of Portfolio Construction

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Stock-bond diversification in historical context
Historically, stock-bond diversification recovers within a few months
A bubble chart shows the percentage of times that both stocks and bonds had negative total returns over various rolling time periods since early 1976, as well as the same data for a 60/40 portfolio. There were negative returns for both stocks and bonds in 14.8% of all monthly periods. The frequency goes down to 0.4% of all one-year periods. No three-year period had negative returns for both stocks and bonds. A 60/40 portfolio had a negative return in 33.3% of all monthly periods, 13.6% of one-year periods, 6.5% of three-year periods, and 0.6% of five-year periods.
The math behind 60/40 portfolios
No magic in 60/40 but in balance and discipline
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