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The 60/40 portfolio doesn't work anymore, according to Bank of America. If the 60/40 portfolio was on life support last year, this year its demise is now "confirmed," Woodard wrote. Bonds require 40% of the assets in a 60/40 portfolio but have delivered only 25% of the returns since 1920, he noted. Weak bond returns will lead to "another lost decade" for the 60/40 portfolio, in Woodard's words. For income, Bank of America's researchers unveiled a strategy called "dynamic prudent yield" that promises to beat bond indexes while carrying less risk.
Persons: Bonds, Jared Woodard, Woodard, Woodward, Schwab Organizations: Bank of America, Bank of, RSP, Vanguard, Energy, P Metals, Mining, Uranium, Research, Government Bond ETF, First Trust, Income, Muni Bond ETF, Muni, Blackstone Senior Loan, of America, Bond, SPDR Bloomberg Convertible Securities ETF, US, iShares, Securities ETF, VanEck Preferred Securities, Financials, Bloomberg, Treasury Bond ETF, Treasury
The recent move higher in Treasury yields appears to be sparking a shift back into short-term bond funds by investors. The 10-year Treasury yield is threatening to climb back above 4%, and the 6-month yield has already topped 5%. The three biggest funds for inflows over the past week were short-term Treasury ETFs, led by the iShares Short Treasury Bond ETF (SHV) , according to FactSet. When interest rates are rising, short-term bonds become more attractive for investors. The FolioBeyond Rising Rates ETF (RISR) , which invests in a slice of mortgage products that benefit from higher rates, is still under $100 million in assets despite outperforming in 2022.
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