Should Investors Turn to the 60/40 Portfolio for Safety Today?

Is the 60/40 portfolio living up to its reputation of resilience this year?

Why it matters: The merit of a classic portfolio of 60% stocks and 40% bonds has been a matter of debate in recent years. A diversified 60/40 strategy failed to protect investors in 2022’s broad market crash—in fact, an all-stock portfolio would have held up better. However, a historical deep dive from Morningstar concluded that the tried-and-true approach lessened the pain in almost all of the worst market crashes in 150 years better than an all-stock portfolio. Morningstar Inc Portfolio Strategist Amy Arnott discusses the 60/40 portfolio’s ups and downs and its performance in 2025.

10 Questions on the 60/40 Portfolio

1. What is a 60/40 portfolio, and why is it popular?
2. We often hear claims that the 60/40 portfolio is “dead” or obsolete. Why does it get criticized so much?
3. Some of that criticism flared up in 2022. Why was the performance so bad for the 60/40 portfolio that year?
4. Volatility has rocked the markets in 2025. How has the classic investment strategy done so far this year?
5. Are there any asset classes that have performed better so far in 2025? Why?
6. And which ones have struggled?
7. Interest rates are sitting above 4%, but market watchers are anticipating the Federal Reserve will cut rates in September. What could that mean for the fixed-income part of the 60/40 portfolio?
8. How do you think the 60/40 portfolio will perform over the next few years?
9. Should people still rely on the 60/40 portfolio, or is another strategy better like the 70/30 or 50/30/20, which can be a mix of stocks, bonds, and alternatives?
10. The tried-and-true strategy has proved its worth. So, what’s the final takeaway for current retirees, future retirees, or anyone seeking less risk?

Key Quote on the 60/40 Portfolio

The 60/40 portfolio is all about balance. So, you’ve got 60% stocks, 40% bonds. It gives you exposure to the two biggest asset classes. And on the stock side, you have equity exposure, so that is going to give you the potential for growth and capital appreciation over time. And on the bond side, you have yield from the bond coupons and also hopefully some downside protection.

So, with those two things together, you’re getting pretty broad market exposure and diversification between stocks and bonds. So, it’s popular because it’s a very simple approach to building a diversified portfolio, and it has also performed pretty well in a variety of market environments.

The Takeaway: The 60/40 portfolio isn’t dead. Despite the bond market rattling investors in 2022, Arnott says it’s not time to give up on the 60/40. The 60/40 may not always be in fashion, says Arnott, but like a classic white T-shirt and Gap jeans, this strategy has remained an excellent starting point for investors to build a diversified portfolio. However, embracing the 60/40 portfolio doesn’t mean that investors should treat it as one size fits all. Portfolio asset allocation should be based on your time horizon. Arnott says she can’t predict the future of the 60/40, but keeping an eye on yields as a good indication of what you can expect for future returns in the fixed-income market, and balancing your US versus international stock exposure, can help prepare you for what’s to come.

More From Morningstar on the 60/40 Portfolio

The 60/40 portfolio is all about balance. Arnott says part of that balance is looking at your US versus international stock exposure. Non-US stocks have outperformed in 2025, and Dan Lefkovitz breaks down why this year has been the time to invest in international stocks. As the dollar weakens, Arnott has also stressed how currency is crucial when it comes to investing internationally. Here’s why holding non-US assets have paid off for investors.

There have also been arguments for adding alternatives to the 60/40. When it comes to alternatives in 2025, it’s no surprise that investors are looking to gold. Arnott says that gold been up 29%, making it one of the best-performing asset classes so far this year. Here’s how Arnott says investors can use gold in their portfolio.

Investors have a lot to learn from market volatility. Morningstar’s recent stress test on the 60/40 illuminated how the strategy helped reduce pain for investors over the long term. Emelia Fredlick digs deeper into the history of market downturns in her article What We’ve Learned From 150 Years of Market Crashes. Fredlick explains what we can and can’t predict from market crashes and shares lessons for investors to navigate market volatility.

Jess Bebel, an associate multimedia editor at Morningstar, contributed to this article.