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Fund Spy

Long Live the 60/40 Portfolio

The classic balanced portfolio wasn't slowed down by the worst quarter for U.S. core bonds this century.


It's a weekday. You know what that means. Somewhere, someone is pronouncing the classic balanced portfolio of 60% stocks and 40% bonds dead. Rising interest rates are the predetermined cause of death. Yet, as interest rates surged in the first quarter of 2021 and U.S. Treasuries were routed for their worst quarterly loss, the old-school balanced portfolio's performance was anything but an outlier.

Vanguard Balanced Index (VBAIX), a fund with a strategic 60% allocation to the U.S. total stock market (the CRSP U.S. Total Market Index) and a 40% allocation the U.S. total bond market (the Bloomberg Barclays U.S. Aggregate Bond Index), gained 2.4% for the first quarter of 2021. That was in line with the fund's 2.3% median quarterly return since 2000. Exhibit 1 shows a snapshot of the fund's range of quarterly returns over that period.

Jason Kephart does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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