Trusted 60/40 investing strategy is broken, and investors should shift away from 'safe' bonds, JPMorgan strategists say

Key Points
  • For investors who rebalance their portfolios on a 60/40 model, JPMorgan strategists warn they should rethink the strategy in the era of zero yield.
  • The strategy suggests a 60% stock holding and a 40% portion in bonds, which no longer provide much return or protection against declines in stocks.
  • Both JPMorgan and BlackRock suggest investors reduce holdings in 'safe bonds' like Treasurys and move into other asset classes.
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At the end of the quarter, especially after a big market move, investors like to tweak their portfolios to reallocate some of their holdings.

But for investors who out of habit follow the old 60% stocks, 40% bonds rule, JPMorgan strategists have a warning. The strategy that worked for decades, providing an average 10% return, may now only return somewhere around 3.5% a year over the next decade.