The classic 60/40 equity and 澳洲幸运5官方开奖结果体彩网:fixed-income portfolio enjoyed gains as stocks🅘 soared this year, but analysts at Vanguard suggest swapping it for a more conservative and fixed-income-heavy asset allocation of 50/50, or even 40/60 in the year ahead.

A senior Vanguard portfolio construction manager projected a 5% to 7% annualized return for a 澳洲幸运5官方开奖结果体彩网:60/40 portfolio over the next decade in a call earlier this week about the firm's 2025 outlook, released Wednesday. But greater exposure to fixed income may be more beneficial.

"Given the subdued expected equity risk premium, perhaps the optimal balance between bonds may be slightly different than the 60/40," Roger Aliaga-Diaz, global head of Portfolio Construction at Vanguard, said in the call Monday. "From a risk perspective, a tilt towards fixed income could be beneficial—something like a 50/50 or even 40/60—because it could produce very similar returns to the 60/40 with much less 澳洲幸运5官方开奖结果体彩网:volatility."

Why Should Investors Become More Conservative?

So why are Vanguard analysts bullish on a more 澳洲幸运5官方开奖结果体彩网:conservative portfolio?

Aliaga-Diaz said he believes that stock market returns could decline in the future due to the high 澳洲幸运5官方开奖结果体彩网:equity valuations in the U.S. ma๊rket, which have been increasing over the past t๊wo years.

"In the near term, we could continue to see momentum in the markets. When we think about the next five years plus (like portfolios for retirement or 澳洲幸运5官方开奖结果体彩网:saving for college), valuations will start dragging down long-te꧂rm returns," he 🍌said.

As a result, Aliaga-Diaz emphasizes the importance of not 澳洲幸运5官方开奖结果体彩网:timing the market and international diversification, nꦜoting that "starting valuations are at much lower level" for global equities beyond the U.S.

As for fixed income, Vanguard has a more rosy long-term outlook for yield. Its analysts say they believe that, globally, 澳洲幸运5官方开奖结果体彩网:interest rates ultimately will settle at higher levels than in the 2010s.

"The era of sound money—characterized by positive 澳洲幸运5官方开奖结果体彩网:real interest rates—will endure, setting the foundation for solid cash and fixed-income returns over the next decade," wrote Vanguard analysts in the 2025 outlook.