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  • The traditional 60-40 stock-bond portfolio is losing efficacy as inflation pressures mount, says JPMorgan Asset Management.
  • Top strategists at the firm shared four alternatives for driving income.
  • They also explained why bitcoin doesn’t have a place in such traditional portfolios.

The pandemic disrupted the global economy and upended industries like travel and commercial real estate. Now, according to top strategists at JPMorgan Asset Management, it may soon claim another victim: the traditional 60-40 stock-bond portfolio.

In projections made after the global financial crisis, JPMorgan found that a 60-40 portfolio of US stocks and bonds delivered a 7.5% return with expected volatility of 8.3%. Now the return has been nearly cut in half to 4.3% – but volatility is even higher, at 9.7%.

That erosion has been hastened by inflationary pressures brought on by prolonged monetary accommodation in response to the pandemic. JPMorgan says the surge in inflation has torpedoed real, inflation-adjusted Treasury yields to near zero, dragging on a significant portion of the 60-40 portfolio.

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