The 60/40 Portfolio Is Not Dead
Long-term performance of a simple balanced portfolio
The 60% stocks / 40% bonds portfolio has survived every crisis of the past 50 years. 2022 was its worst year in decades (-18% nominal), but the 50-year track record remains approximately 9% annualized with significantly lower volatility than 100% equities.
What history says
Editorial commentary written by ALAN analysts. Figures cited below are analyst-authored context — they are not derived from the chart above and may reflect different windows or sources.
60/40's -18% in 2022 was only the 3rd negative year in 50. It was caused by the simultaneous bond crash (rates from 0% to 5%). This required starting from 0% rates — a condition that no longer exists.
Over 30-year periods, 60/40 has delivered approximately 85% of the S&P 500's return with roughly 60% of the standard deviation. The Sharpe ratio is consistently superior.
Clients who stick with a simple 60/40 outperform most clients with complex allocations because they rebalance consistently and avoid behavioral mistakes. Complexity invites tinkering.
Resist upgrading a simple balanced allocation into something complicated after one bad year — the discipline of consistently rebalancing a plain mix has historically beaten the sophistication of portfolios their owners kept tinkering with.