Perspective

Thought Leadership

Don’t stop thinking about tomorrow


Lesley-Ann Morgan

Lesley-Ann Morgan

Head of Multi-Asset Strategy

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Adam Farstrup

Adam Farstrup

Head of Multi-Asset

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Ben Popatlal

Ben Popatlal

Multi-Asset Strategist

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Sticking to a static allocation between equities and bonds of 60/40 has resulted in very different outcomes in different decades. For the next decade we see a number of challenges for static 60/40 portfolios:

  • We expect significantly lower returns in these two narrow asset classes over the longer term
  • Correlations between asset classes and relationships to the phase of the economic cycle are likely to become less stable as a result of the significant fiscal stimulus that has been provided to combat the economic effects of Covid-19
  • Uncertainty abounds, requiring investment hedges to protect the portfolio against detrimental scenarios and is something that cannot be achieved with just two asset classes.

Looking back at the past is a necessary exercise, but investors should not stop thinking about tomorrow.