This Classic Investment Strategy Is Still Alive in 2025

A look at the 60/40 portfolio performance this year and whether another strategy is better.

Is the 60/40 portfolio living up to its reputation of resilience this year? The merit of a classic portfolio of 60% stocks and 40% bonds has been a matter of debate in recent years. A diversified 60/40 strategy failed to protect investors in 2022’s broad market crash—in fact, an all-stock portfolio would have held up better. However, a historical deep dive from Morningstar concluded that the tried-and-true approach lessened the pain in almost all of the worst market crashes in 150 years better than an all-stock portfolio. Morningstar Inc Portfolio Strategist Amy Arnott discusses the 60/40 portfolio’s ups and downs and its performance in 2025.

01:00 What is a 60/40 portfolio, and why is it popular?

02:00 We often hear claims that the 60/40 portfolio is “dead” or obsolete. Why does it get criticized so much?

03:05 Some of that criticism flared up in 2022. Why was the performance so bad for the 60/40 portfolio that year?

03:49 Volatility has rocked the markets in 2025. How has the classic investment strategy done so far this year?

04:35 Are there any asset classes that have performed better so far in 2025? Why?

06:26 And which ones have struggled?

07:22 Interest rates are sitting above 4%, but market watchers are anticipating the Federal Reserve will cut rates in September. What could that mean for the fixed-income part of the 60/40 portfolio?

07:53 How do you think the 60/40 portfolio will perform over the next few years?

08:48 Should people still rely on the 60/40 portfolio, or is another strategy better like the 70/30 or 50/30/20, which can be a mix of stocks, bonds, and alternatives?

11:29 The tried-and-true strategy has proved its worth. So, what’s the final takeaway for current retirees, future retirees, or anyone seeking less risk?

Read about topics from this episode.

The 60/40 Portfolio: A 150-Year Markets Stress Test https://www.morningstar.com/economy/6040-portfolio-150-year-markets-stress-test

Is the 60/40 Portfolio Feeling ’22? https://www.morningstar.com/portfolios/is-6040-portfolio-good-investment-now-2

What We’ve Learned From 150 Years of Stock Market Crashes https://www.morningstar.com/economy/what-weve-learned-150-years-stock-market-crashes

How Does Your 60/40 Portfolio Allocation Compare With the Pros? https://www.morningstar.com/portfolios/how-does-your-6040-portfolio-allocation-compare-with-pros

Why 2025 Is the Year to Invest in International Stocks https://www.morningstar.com/markets/why-2025-is-year-invest-international-stocks

Why It’s Not Too Late to Add International Exposure https://www.morningstar.com/portfolios/why-its-not-too-late-add-international-exposure

Why Holding Assets Outside the US Dollar Has Paid Off in 2025 https://www.morningstar.com/portfolios/why-holding-assets-outside-us-dollar-has-paid-off-2025

How to Use Gold in Your Portfolio https://www.morningstar.com/portfolios/how-use-gold-your-portfolio

Portfolio Diversification Is Winning in 2025 https://www.morningstar.com/portfolios/portfolio-diversification-is-winning-2025

What to watch from Morningstar.

These 16 Standout Funds Are Making Big Bets. Do They Fit in Your Investment Portfolio? https://youtu.be/OhvSbSSus7Q?si=QHYftvOHeK56NNS8