2022 Building a More Balanced Portfolio

Contributors

Will McIntosh, Ph.D
Global Head of Research

Jay Johnston
Senior Associate, Research

Greg Stark
Executive Managing Director, Private Wealth

Jeff Holland
Managing Director, Private Wealth

September 2022

Executive Summary

  • Based on a changing definition of risk combined with diminished expectations around the future economic environment, the 60% stock and 40% bond (60/40) portfolio may no longer be the most efficient asset allocation mix
  • While the 60/40 has worked in the past, it is likely to fall short of meeting client needs going forward and the mix of only two asset classes may call into question truly how diversified this portfolio is for investors
  • Portfolios can achieve better risk-return optimization through the inclusion of private commercial real estate (CRE), a multi-dimensional asset class with the potential for attractive returns, enhanced income, diversification, and inflation protection benefits
  • Building a more balanced portfolio of stocks, bonds, and private CRE can help to achieve a more efficient frontier and can lead to more successful financial outcomes for investors