Richard Bernstein Advisors: Is the 60/40 portfolio dead?

Q1 was one of the worst quarters

Traditional long-only fixed income managers had one of the worst quarters on record in Q1 2022, as higher interest rates left ‘bottom up’ portfolios overweight duration

In a world where macro variables drive returns, owning thousands of individual bonds leaves the impossible task for controlling credit and duration risk at the portfolio level. Instead, portfolios constructed with illiquid individual bonds become ‘index-like' and static, unable to react to new information and new regimes.  Although the pain is not over for these types of portfolios, fixed income - even in a world where inflation and interest rates are rising - can still be prudently used to help diversify and protect a portfolio from equity drawdowns.    To thrive, managers will need ...