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

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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

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