60 40 Portfolio Allocation

The 60/40 portfolio is established as a reference point. This is selected as a benchmark because of its ubiquitousness in the industry, and because it’s a difficult bar to beat given the steady downtrend in Treasury rates over the last 30+ years. It comprises a 60% allocation to SPY (S&P 500) and a 40% allocation to IEF (intermediate-term US Treasuries), with monthly rebalancing. Over the past three decades, outperforming the 60/40 benchmark has proven to be quite challenging, primarily due to the consistent decline in Treasury yields. Many investors consider the 60/40 benchmark as a solid foundation for a well-diversified portfolio, and for that reason, we offer our members the option to include it in their personally tailored Model Portfolio."

Strategy current allocation

60 40 Portfolio Equity Curve

60 40 Portfolio strategy statistics

Conventional investment portfolios that primarily focus on long-term holdings typically comprise a significant portion of stocks along with a smaller portion of bonds. A common allocation strategy involves investing 60% of the capital in stocks and the remaining 40% in bonds. For instance, if you have $1,000,000 in available funds, you would allocate $600,000 towards equities and $400,000 towards bonds. Nonetheless, as discussed in the first strategy, it is important to recognize that the risk associated with a typical equity market, such as the S&P 500, is notably higher when compared to bonds, like the US 10-year bond. The annualized standard deviation in returns for these assets stands at 16% and 8%, respectively. Consequently, the proportion of overall portfolio risk attributed to equities will be substantially greater than what might be inferred from their 60% cash allocation, estimated to be approximately 75%.

60 40 Portfolio returns