Vanguard Advocates for Increased Bond Allocation Amid Stock Market Risks
Vanguard's chief investment officer, Gregory Davis, suggests investors consider allocating more than 50% of their portfolios to bonds, citing elevated stock valuations and risks surrounding AI investments. The 10-year Treasury yield at 4.2% offers a real yield for the first time in nearly a decade, making bonds an attractive alternative.
The 60/40 portfolio—60% stocks and 40% bonds—faced scrutiny during the 2022 bear market as aggressive Fed rate hikes impacted both equities and fixed income. Now, some money managers are revisiting the strategy with modern adjustments, as Treasury yields rebound from historic lows post-2008 and Covid-19.