Some Quantitative Alternatives to the 60-40 Portfolio

Excess Returns · Jun 20, 2021 · 21m

In a world where inflation is not a threat, a standard 60-40 portfolio does an excellent job of providing growth, while also limiting downside when stocks get choppy. You don’t need anything more than the last 40 years, when the 60-40 portfolio had its best stretch ever, to illustrate that. The 60/40 has produced a 9.2% annualized return going back to 1988 – that is an impressive return for a portfolio that buys the overall market and aggregate bond index, rebalances once a year and calls it a day.

But with inflation potentially on the horizon, some argue that the 60-40 may not be enough…