Thursday, 23 June 2022 03:59

High Volatility Killing the 60/40 Portfolio

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Recession, inflation, and interest rate volatility are reaching 40-year high levels of risk which has investors changing things up and ditching the 60/40 portfolio split. Whatever risks investors thought were present in their portfolio 6-months ago are drastically different today. Investors desperately need to re-allocate and re-balance that risk to a more suitable set of investments for the second half of 2022. Investors should look to more alternative investments because there is high-interest rate volatility. In fact, the US has dropped into a recession in over 75% of tightening cycles since the great depression. Generally, these tightening cycles increase the correlations between bonds and equities and hurt the cushion bonds normally bring.

Finsum: Advisors need to think outside the box to prepare for volatility in this cycle. 

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