Don’t Lose Faith in the 60/40 Portfolio

Morningstar

Lauren Solberg

Research

13 Pages

Morningstar reassesses the classic 60/40 mix and argues its core logic still holds. Higher starting bond yields improve carry, equity valuations look more reasonable, and disciplined rebalancing remains a powerful tool. The piece emphasizes process over prediction and cautions against abandoning diversification after a tough stretch.

Key Takeaways

Valuation backdrop: Equity multiples have normalized, improving longer run expectations for the stock sleeve.
Income cushion: Bond yields are materially higher, restoring carry and potential diversification benefits.
Rebalancing discipline: Systematic rebalancing helps capture mean reversion and reduces behavioral mistakes.
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