Advisers eighty-sixing 60/40 portfolio allocation: Survey

Advisers eighty-sixing 60/40 portfolio allocation: Survey
Traditional investment strategy seen as old school; value of buy-and-hold also questioned
MAY 23, 2012
Financial advisers no longer sing the praises of asset allocation models that use 60% stocks and 40% bonds to seek returns and balance investment risks. Indeed, according to a new survey, advisers want new methods for portfolio construction. About half of the 163 advisers who responded to the survey said they are ambivalent about the benefits of the traditional 60/40 mix. In fact, 40% said flat-out that they believe the strategy is no longer the best way to achieve performance and manage risk. Barely one in five of the advisers surveyed said they believe the 60/40 strategy is still the best method. “Our research confirms that financial advisers are questioning the merits of time-honored portfolio construction strategies and looking for new solutions,” said John T. Hailer, chief executive of Natixis Global Asset Management. Many respondents — 63% — said they either don't believe in or aren't sure of the value of long-term buy-and-hold strategies, according to the study, released by Natixis on Wednesday. About 40% of the advisers said new asset allocation models and portfolio construction methods are needed, while only a little more than 20% said they favor what they're using now. Financial adviser Neal Frankle of Wealth Resources Group said the 60/40 asset allocation method can't be used the same way it has been for the past 30 years. When he relies on it, he works with a dynamic portfolio of stocks, and on the fixed income side, he has switched to all short- or medium-term bonds. The biggest allocation shift he's made with clients is to increasingly add physical real estate as an alternative asset for some clients, he said. “Real estate, for the right client, is the right place now because prices are low and it can produce an income stream,” he said.

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.