Classic 60/40 Portfolio
Background
The Classic 60/40 Portfolio is one of the most enduring asset allocation strategies in modern investing. Its roots trace back to the mid-20th century with the development of Modern Portfolio Theory by Harry Markowitz, who demonstrated that combining risky and conservative assets could produce a more efficient risk–return balance. The 60/40 mix—allocating roughly 60% to stocks and 40% to bonds—became a widely accepted standard for balanced investing, blending the growth potential of equities with the stability of fixed income. Over time, it has served as a benchmark for pension funds, endowments, and individual investors alike.
Primary Goals
The primary goal of the 60/40 Portfolio is to achieve a balanced combination of growth and capital preservation. The equity allocation provides long-term appreciation and a hedge against inflation, while the bond allocation adds income and helps dampen volatility during market downturns. The secondary goal is to create a structure that is easy to maintain and adaptable to most investor risk profiles without requiring constant monitoring or tactical adjustments.
The portfolio is designed to remain resilient across a range of market conditions:
- Economic growth: Stocks generate strong returns as corporate profits and economic activity rise.
- Inflation: Equities and bond interest income together help offset moderate inflation over time.
- Deflation or recession: Bonds typically appreciate in value as interest rates decline, cushioning stock market losses.
- Market volatility: The blended structure reduces portfolio swings compared with an all-equity allocation, supporting investor discipline.
By maintaining exposure to both risk assets and defensive assets, the 60/40 Portfolio aims to deliver steady, inflation-adjusted growth that meets the long-term needs of many diversified investors.
Construction
The Classic 60/40 Portfolio is composed of two broad asset classes—equities and fixed income—implemented through diversified, low-cost index funds or ETFs. Each plays a distinct role in achieving the portfolio’s balance:
- Equities (60%): Represent ownership in companies across domestic and international markets, providing long-term growth, dividend income, and inflation protection.
- Bonds (40%): Include high-quality government and investment-grade corporate debt, offering income stability and downside protection when equities decline.
Variations of the 60/40 Portfolio may adjust the proportions slightly depending on investor objectives, risk tolerance, or market conditions—for example, a 70/30 mix for more aggressive investors or a 50/50 mix for those seeking lower volatility. Despite periodic challenges in unusual interest rate or inflation environments, the 60/40 structure remains a foundational model for diversified, long-term investing because of its clarity, simplicity, and proven track record over decades.
Performance & Returns
Total Return by Period
Updated: Nov 04, 2025
| 1 Day | 1 Week | 28 Days | 90 Days | 1 Year | 3 Years | 5 Years | 10 Years |
|---|---|---|---|---|---|---|---|
| -0.67% | -1.49% | 0.39% | 4.27% | 11.31% | 45.55% | 38.34% | 97.62% |
Total Return by Year
| 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|---|---|
| 14.66% | 17.59% | -16.75% | 14.16% | 15.99% | 21.78% | -3.03% | 14.04% | 8.75% | 0.46% |
10 Year Performance
| Total Return | Annualized Return | CAGR | Max Drawdown | Sharpe Ratio | Sortino Ratio | Calmar Ratio | Ulcer Index |
|---|---|---|---|---|---|---|---|
| 97.62% | 7.50% | 7.07% | -39.19% | 0.39 | 0.47 | 0.19 | 0.07 |
Asset Allocation
| Symbol | Description | Weight % |
|---|---|---|
| VTI | Vanguard Total Stock Market ETF | 60.0 |
| BND | Vanguard Total Bond Market ETF | 40.0 |
Total Return Graph
No Taxes, No Rebalancing.