Trump turbulence throws 60/40 portfolio investment strategy into question

[SINGAPORE] The 60/40 portfolio – allocating 60 per cent of one’s investments to equities and the remaining 40 per cent to bonds – has been a commonly touted investment strategy. But analysts warned that macroeconomic uncertainties – including the direction and impact of interest rates and trade tariffs – are throwing this strategy of maintaining a well-balanced, diversified portfolio into disarray.

The way DBS chief investment officer Hou Wey Fook sees it, current macroeconomic conditions have rendered the 60/40 portfolio investment strategy suboptimal.

For moderate-risk investors, the 60/40 portfolio allocation has been a popular rule of thumb as it seeks to balance the higher risk and higher return potential of equities with the lower risk and stability of bonds.