The “new 60/40” portfolio

In recent years, the notion of “correct” portfolio construction has been challenged and diversification has become unpopular. Stocks and bonds have shown an increased propensity to move together, calling into question the efficacy of the classic “60/40” portfolio. Moreover, sustained outperformance in select segments of global financial markets has caused portfolios to drift away from target allocations and left many investors with little motivation to allocate elsewhere. However, with a new year comes new forces driving markets, and the winners of the past may not be the winners of the future. To prepare portfolios for any unforeseen risks that may arise in 2025, diversification remains the best option, although the ways in which investors can diversify may look different than before. To share his thoughts on diversification in the year ahead, Dr. David Kelly is joined by Jack Manley, Global Market Strategist here at J.P. Morgan Asset Management. Timestamps: (00:00) Introduction (1:20) Is the 60/40 dead? (4:28) Is there a “correct” asset allocation? (6:40) How could different asset classes solve for different “issues” that will be relevant in 2025? (13:14) What might be some of the biggest challenges facing portfolio construction in this coming year?