Vanguard says 60-40 investing strategy is not dead and will work out again for investors

After ugly losses in both stocks and bonds, many investors have written off the 60/40 investing strategy. But Vanguard says the market correction could help this tactic perform much like it has in the past. The strategy is based on a portfolio with 60% of its assets in stocks and 40% in bonds . It has been a classic go-to for many investors, who expect it to provide growth and relative safety while generating steady returns.

"Back in December 2021, equities were about 40% overvalued in our view. The ironic thing about this market collapse is, as painful as it has been, the forward-looking prospects are better," he said. "Equity valuations are much more normal, though not normal yet. Some people say they are still 5% to 10% overvalued. But interest rates are much higher, too. The fixed income side of the portfolio should generate more income." Vanguard has funds based on the 60/40 strategy.

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Traditional 60/40 strategy may start to work again for investors, but 'tightening cycles can be scary,' Goldman exec saysThe traditional allocation of 60% stocks and 40% bonds may start to work again, after such portfolios were badly hurt this year, according to Ashish Shah, chief investment officer of public investments at Goldman Sachs Group’s asset management business.
Source: MarketWatch - 🏆 3. / 97 Read more »