The strategists of the world’s largest investment company, BlackRock, abandoned the classic scheme of portfolio formation. Under current market conditions, the 60% stocks, 40% bonds strategy is no longer tenable, because bond yields have become highly dependent on stock returns, experts said.
The investment company BlackRock refused to invest according to the classic 60/40 scheme, where 60% are stocks, 40% are bonds. This was reported to Bloomberg by the organization’s strategists.
The 60/40 portfolio is no longer sustainable under current circumstances as the US Federal Reserve raises interest rates to combat record inflation.
BlackRock believes that bond yields have become more dependent on bond yields, so the approach to investing in fixed income assets should be reconsidered.
The Bloomberg 60/40 Index collapsed 17% in 2022, marking a multi-year record drop. In 2023, the index went up, but BlackRock does not see this event as a sign that the index is returning to sustainable growth.
Right now, inflation in the US is at its highest level in over 40 years. To reduce it, for the past year the US Federal Reserve has been raising the discount rate; it is now at the highest level since 2007 of 4.75-5%.
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