BlackRock Inc. strategists are ditching the 60/40 portfolio in favor of public and private investments as well as tactical holdings of bonds to navigate higher interest rates.
Q1 2023 hedge fund letters, conferences and more
Strategists from BlackRock Investment Institute, the research arm of the world’s largest asset manager, recommend “breaking up traditional asset allocation buckets, moving away from broad allocations to public equities and bonds,” according to a Tuesday note.
“These old assumptions do not reflect the new regime we’re in – one where major central banks are hiking interest rates into recession to try to bring inflation down,” the strategists said.
A Bloomberg US 60/40 portfolio index is up 6.3% this year after tumbling almost 17% in 2022 in its biggest annual drop in over a decade. However, BlackRock strategists warn this does not indicate a return to the persistent gains seen in the four decades since the early 1980s for the popular portfolio mix.
The strategists recommend looking at specific equity sectors, such as energy or healthcare, and selecting companies with robust cash flows and resilient supply chains that can endure a recession.
Read the full article here by Richard Henderson, Advisor Perspectives.
