A rare selloff for both stocks and bonds slammed investors. Will the 60-40 portfolio survive?

The first half of 2022 has been a historically bad stretch for markets, and the carnage hasn’t been limited to stocks. As stocks and bonds have sold off in tandem, investors who for years have relied on the 60-40 portfolio — named because it involves holding 60% of one’s assets in stocks, and the remaining 40% in bonds — have struggled to find respite from the selling.

Practically every area of investment (with the exception of real assets like housing and surging commodities like oil
) has underperformed cash and cash equivalents, like short-dated Treasury bonds.

According to analysts at Goldman Sachs, Penn Mutual Asset Management and others, the 60-40 portfolio hasn’t performed this bad for decades.

“This has been one of the worst starts to the year in a very long time,” said Rishabh Bhandari, a senior portfolio manager at Capstone Investment Advisors.

Goldman’s gauge of the model 60-40 portfolio’s performance has fallen by roughly 20% since the start of the year, marking the worst performance since the 1960s, according to a team of analysts led by Chief Global Equity Strategist Peter Oppenheimer.

The selling in stocks and bonds so far this year has driven 60-40 portfolios to their worst performance in decades. SOURCE: GOLDMAN SACHS

Government bonds were on track for their worst year since 1865, the year the U.S. Civil War ended, as MarketWatch reported earlier. On the equities side, the S&P 500 finished the first half with the worst performance to start a year since the early 1970s. When adjusted for inflation, it was its worst stretch for real returns since the 1960s, according to data from Deutsche…


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