Beyond the 60/40: Why the traditional portfolio blueprint is being tested again

The assumption that bonds protect when equities fall has been central to portfolio construction for a generation. However, advisers who rely on it alone may be carrying more risk than they realise. Cast your mind back to 2022, inflation surged, central banks responded with the most aggressive rate-hiking cycle in four decades and portfolios that had seemed conservatively positioned suddenly looked anything but. Cautious portfolios, which may contain a greater proportion of long-duration government bonds, suffered capital losses in the region of 10 to 20 per cent. For clients in or approa...