The Death of the 60/40 Paradigm and the Rise of Developed Market Strategies
The traditional 60/40 portfolio model, long revered for its stability through the inverse relationship between stocks and bonds, is facing unprecedented structural challenges. Macro shifts—accelerating AI investment, fading hyper-globalization, and persistent inflation—are driving stocks and bonds into positive correlation. When these core assets MOVE in lockstep, diversification fails at the worst possible moment.
Sophisticated investors are turning to Developed Markets (DM) for solutions. DM assets offer superior liquidity, stability, and depth—critical defenses in today’s volatile climate. Emerging markets, by contrast, suffer from illiquidity risks that traditional models dangerously underestimate.
The new imperative? Advanced, institutionally proven strategies that go beyond asset-class mixing. The era of passive diversification is over; active risk management in DMs is now the benchmark for resilience.
