(Bloomberg) Two of the world’s largest sovereign wealth funds say investors should expect much lower returns in the future in part because the typical balanced portfolio of 60/40 stocks and bonds no longer works as well in the current rate environment.Singapore’s GIC Pte and Australia’s Future Fund said global investors have relied on the bond market to simultaneously juice returns for decades, while adding a buffer to their portfolio against equity market risks. Those days are gone with yields largely rising.“Bonds have been in retrospect this gift,” with a 40-year rally that has boosted all portfolios, said Sue Brake, chief investment officer of Australia’s A$218.3 billion ($168.4 billion) fund. “But that’s over,” she added, saying “replacing it is impossible I don’t think there’s any one asset class that could replace it.”Thanks to the declining returns of bonds, the model 60/40 portfolio
Death of 60/40 Portfolio Makes Returns Harder for Funds
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Death of 60/40 Portfolio Makes Returns Harder for Funds
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