Fans of the classic 60/40 portfolio should consider switching up their asset mix as the outlook for stocks and bonds has dimmed, a Goldman Sachs strategist has warned.
"The market needs to prepare for a period where those portfolios are unlikely to do as well in risk-adjusted terms," Christian Mueller-Glissmann, Goldman's head of asset allocation research within portfolio strategy, said during aThe market backdrop over the last 20 years was"phenomenal" for a portfolio split 60-40 between stocks and bonds, but the next decade may not be as rosy, he cautioned.
The Goldman portfolio expert also touted private investments as a smart bet, noting they can provide access to assets and investment strategies that can't be found in public markets. He offered several examples including infrastructure, early-stage AI ventures, and private credit which could benefit from tighter lending by regional banks.
Mueller-Glissmann also suggested investors might want to bet on higher-quality equities and credit, which may fare better if businesses run into trouble and borrowers default on their debts. Moreover, he highlighted options — derivatives that are often used to bet on the future price of an asset — as useful tools in hedging against downturns too.
The elite researcher also recommended keeping a close eye on factors that could alter the US macroeconomic outlook, including employment data, the current clash over the debt ceiling, and a potential manufacturing recovery.
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