- Some see a bull market in corporate credit
- What’s the catch?
For many investors, only two asset classes really matter. Shares offer a stake in economic growth and human ingenuity, while bonds lock in near-guaranteed income. Over time, the higher risk and volatility that tends to accompany stocks’ higher rewards can in turn be smoothed by bond returns.
There’s good evidence for this view. Between 1926 and 2021, a 60/40 split between US equities and bonds would have generated an average 8.8 per cent a year, says Vanguard. While last year’s rare correlation in stock and bond price moves prompted obituaries for the strategy, a better showing for shares this year means the average 60/40 portfolio is likely to be up so far in 2023.