A traditional 60/40 stock-and-bond allocation delivered double-digit returns in 2025, outperforming many alternative strategies, yet remains underappreciated by investors. The blend of SPX and TLT/BND exposure proved resilient amid shifting market dynamics.
- The 60/40 portfolio returned 12.3% in 2025, its strongest year since 2019
- S&P 500 (SPX) gained 11.7%, while TLT rose 5.8% and BND delivered 3.5%
- Net outflows of $18.3 billion from balanced funds in early 2025 despite strong returns
- The strategy offered downside protection during mid-year rate-cut speculation
- SPX closed 2025 at 5,432; TLT peaked at 118.7; BND yield-to-maturity was 3.9%
- Growing re-evaluation of 60/40 model amid persistent investor skepticism
The 60/40 stock-and-bond portfolio—comprising a 60% weighting in equities and 40% in fixed income—achieved a 12.3% return in 2025, marking its strongest annual performance since 2019. This result was driven primarily by strong gains in the S&P 500 (SPX), which rose 11.7%, coupled with a 5.8% rally in long-duration Treasury bonds, as measured by the iShares 20+ Year Treasury Bond ETF (TLT), and a 3.5% return in the Vanguard Total Bond Market ETF (BND). The combination of equities and bonds offset volatility, providing downside protection during mid-year rate-cut speculation. Despite these results, investor interest in the 60/40 model remains subdued. Asset flows data from the first half of 2025 show net outflows of $18.3 billion from core balanced mutual funds and ETFs, reflecting a persistent preference for alternatives like private credit, real assets, and multi-asset strategies. Behavioral patterns suggest a growing skepticism toward traditional allocations, even as they deliver consistent returns. The performance of the 60/40 blend underscores its enduring role in long-term portfolio construction. With SPX closing the year at 5,432 and TLT reaching a 2025 high of 118.7, the combination effectively leveraged falling long-term yields and corporate earnings resilience. BND, meanwhile, provided steady income with a yield-to-maturity of 3.9%, enhancing total return without significant volatility. Market participants, including financial advisors and institutional allocators, are beginning to reassess the model’s relevance. The 60/40 strategy’s ability to deliver positive returns across multiple market regimes—growth, inflationary, and rate-cutting—raises questions about the necessity of complex alternatives. As volatility persists and macro uncertainty lingers, the simplicity and reliability of this core allocation are gaining renewed attention.