Hal Cook, senior investment analyst at Hargreaves Lansdown, says the post‑Covid increase in correlation of returns between shares and bonds has fuelled debate about the fate of the 60/40 portfolio, but he contends the debate overstates the case.
He notes the key difference is volatility, share price moves tend to be much larger than bond price moves so, even when both fall together, a mixed portfolio is likely to lose less in a shock; he also points to inflation as a common driver of recent co‑movement and to the 2022 bond‑market reset, which left higher yields and more scope for price gains.
As evidence he cites recent months when stock and bond moves have aligned and lists alternatives investors consider, gold, private assets, hedge funds, derivative protection strategies, property and cash, while warning each carries trade‑offs on liquidity, complexity and returns.
"We continue to think bonds are a great way to diversify portfolios," Hal Cook said, and he adds that if inflation returns to and stays around a 2% target, shares and bonds could start to perform more differently again.
