Are Bonds Even A Good Diversifier Anymore?

2025-06-03 12:10:00 ET

Summary

• Rather than relying on bonds solely as a risk-off hedge, they may now be better viewed as a yield engine within a broader total return framework.
• Investors can’t afford to rely on the assumption that broad fixed income exposure will behave as it did during a 30-year secular decline in rates.
• We’re not saying there’s a clear replacement for the traditional risk-off asset, because there isn’t.

There’s been plenty of chatter about the so-called “death” of the 60/40 portfolio. We wouldn’t go that far. But it’s hard to ignore how 2022 and much of the current macroeconomic environment has exposed some cracks in this once-unquestioned allocation approach....

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