For decades, the 60/40 portfolio was considered the gold standard of diversification — a reliable framework built on a simple premise: when stocks fall, bonds rise. For much of the past 40 years, that held true.
But in 2022, stocks and bonds declined together — sharply, and without the cushion that a balanced allocation was designed to provide. It was a reminder that the inverse relationship investors had long relied upon was never a market law. It was a condition, one shaped by a specific interest rate environment that has since changed.
Today's equity markets carry concentration risk that may surprise many investors. And with the opportunity set in private markets continuing to expand, the question worth asking is whether a two-asset framework still captures the full picture.
The Illusion of Balance examines what genuine diversification may look like in today's environment — and why private alternatives may deserve a seat at the table.
