The traditional 60/40 investment portfolio has recorded a remarkable year of growth in 2023, sharply rebounding from a disappointing year in 2022. As of Dec. 27, the year-to-date performance of the 60/40 portfolio, benchmarked by the iShares Core Growth Allocation ETF (NYSE:AOR), stands at approximately 13%.
This performance figure ranks as the third-best year for the strategy since its inception in 2008, trailing only behind the strong years of 2009 and 2019.
As we enter the new year, investors are pondering whether the favorable conditions that supported both equities and bonds in the second half of the year will endure.
60/40 Portfolio In 2022-2023: From Downturn to Upswing
The 60/40 portfolio is a time-tested investment strategy known for its simplicity and effectiveness. It involves allocating 60% of the portfolio to stocks and 40% to bonds, with the aim to strike a balance between risk and reward.
Stocks offer the potential for higher returns but come with higher risk, while bonds generally provide lower but more stable returns. By combining both asset classes, the portfolio naturally diversifies, potentially reducing the risk of significant losses since stocks and bonds often react differently to market conditions.
In 2022, the traditional 60/40 portfolio faced one of its most challenging years due to the Fed’s aggressive interest rate hikes, which created strong headwinds for both equities and fixed-income assets.
The gauge fell as much as 17%, wiping out a ...Full story available on Benzinga.com
Related tickers: AGG, AOR, BND, IVV, SPY, TLT, VT, VTI, ACWI, BNDX, BNDW.
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