A simple 60/40 portfolio holding consisting of S&P500 equity and US government bonds would have performed impressively both last year (+13%) and in the past twenty. Jason Draho, who is Head of Asset Allocation America at UBS, starts with the basics: the strong performance is not only due to the general bull market in equities and bonds, but also because bonds show less volatility than stocks. This reduces overall portfolio risk. Furthermore, Draho points to a negative correlation between the two products, offering a natural hedge…
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