A globally diversified, 60% stock, 40% bond portfolio posted a nearly 30% return from year-end 2022 through September, rallying back from a rough downturn that had some analysts writing premature obituaries for the traditional allocation in 2022, Vanguard Group says.
Even accounting for 2022, the 60/40 portfolio's trailing annualized return came to 6.9% over the past decade, 10 basis points above its long-term average, Vanguard noted in a commentary this week. The asset manager based its calculations on various market indexes for U.S. and non-U.S. stocks and bonds.
"The fact of the matter is that the long-term track record of the 60/40 has been consistently strong," Todd Schlanger, Vanguard senior investment strategist, said in the article.
"Though unusual, it's not unprecedented to see stocks and bonds decline in tandem. Even so, the 60/40 portfolio can be a wise choice for clients with a moderate risk tolerance seeking broad diversification and a track record of solid long-term results."
While strong equity returns had an outsize effect on the 60/40 portfolio in the last decade, driving valuations higher, Vanguard said it expects to see more proportional contributions from each asset class over the next 10 years.
