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JPMorgan Supports 60/40 Investments Despite Higher Interest Rates

The 60/40 portfolio is still a viable strategy for investors in the current economy according to experts. Photo Credit: Shutterstock

Posted October 19, 2023

The investment strategy for the 60/40 portfolio isn’t dead, regardless of being stressed since the pandemic, and is a better investment strategy than cash over the next decade, according to JPMorgan Asset Management.

The 60/40 portfolio is an investment strategy that allocates 60 percent to stocks and 40 percent to bonds. Following the spike in inflation in 2022, stocks experienced a steep decline thus damaging the incentive to use the 60/40 portfolio.

However, JPMorgan’s money managers say the popular portfolio isn’t dead, according to its 2024 Long-Term Capital Market Assumptions report. The 60/40 portfolio is set to exceed cash by an annualized 4.1 percentage points, and inflation by 4.5 percentage points, over the next decade, according to JPMorgan.

“The world is entering a period of significant economic transition in the wake of the global pandemic and heightened geopolitical tension, with far-reaching implications for investors. We are moving away from an environment with persistent disinflation, ultra-easy monetary policy, and fiscal restraint,” Head of Global Multi-Asset Strategy at J.P. Morgan Asset Management, John Bilton said.

The money-managing company claims adding a 25 percent allocation to alternative assets can boost 60/40 returns by 0.6 percentage points year-over-year for the next 10 years.

View JPMorgan’s 2024 Long-Term Capital Market Assumptions, here.