Traditionally, publicly traded stocks and bonds were considered the building blocks of a portfolio. A traditional portfolio was often considered meaningfully diversified when split with a 60% allocation to stocks and 40% allocation to bonds, where stocks would provide capital appreciation and bonds would provide downside mitigation and income. However, in recent years, rising stock-bond correlations have posed challenges to this traditional 60/40 portfolio.
The Power of Private Markets
It is generally harder today for investors to find meaningful sources of diversification in their portfolios.
Source: Bloomberg as of January 31, 2024. Correlation between stocks and bonds is represented by the average trailing 12-month correlations over the indicated periods. Stocks are represented by the S&P 500 Index. Bonds are represented by the Bloomberg US Aggregate Bond Index.