After years of poor returns, bond investors finally see a reason to stay. The market is selling off, yet the classic 60-40 portfolio is working as intended.
Money managers are urging clients to reconsider fixed income. They point to rising yields that offer real income for the first time in years.
The 60-40 portfolio splits assets between stocks and bonds. For much of the past decade, bonds dragged down returns while stocks soared.
That dynamic has shifted. Bonds now provide a cushion when stocks fall, fulfilling their traditional role.
Recent volatility tested the strategy. When equities dropped, bonds held steady or gained, softening the blow for diversified portfolios.
Higher interest rates drive the change. New bonds pay more, making the asset class attractive for long-term holders.
Advisors caution that past performance does not guarantee future results. Yet many argue the case for bonds is stronger now than at any point since before the 2008 crisis.
