Is the 'traditional portfolio' dead? Performance is the worst, mixed opinions - what assets to hedge with?

operating assetsAllocate 60% to stocks and 40% to bonds.In the United States, the traditional investment strategy of the "60-40 Portfolio," which is widely adopted by individual investors, has sparked debate among major institutional strategists. The strategy is based on the premise of a negative correlation between stocks aimed at capital gains and bonds intended for risk hedging.However, due to the abnormal volatility in the bond market caused by factors such as tightening of U.S. monetary policy, the expected correlation has been lost.Recently, there has been a growing critical view towards the same portfolio.and bonds.but there is debate among major institutional strategists regarding its efficacy. The strategy assumes a negative correlation between stocks pursued for capital gains and bonds intended for risk management.but the unusual volatility in the bond market due to various factors such as U.S. monetary tightening has caused the expected correlation to break down,and recently, critical views towards the same portfolio have gained momentum.

The bond market is strongly opaque.
On November 10th of the previous weekend, Moody's Investors Service, a US credit rating agency, downgraded the credit rating outlook of the United States from 'Stable' to 'Negative' due to fiscal soundness risks and political polarization risks.Credit rating outlookwas lowered from the traditional 'Stable' to 'Negative (weakly inclined)'. While the rating was maintained at the highest level of 'Aaa', S&P Global Ratings and Fitch Ratings have already downgraded the rating from 'Highest', making it an unreliable situation for asset risk hedging.for already downgraded ratings, being 'highest',it is an unreliable situation for asset risk hedging.

The worst performance
The 60-40 portfolio has been trusted for a long time, but in 2022, it experienced the worst performance since 2008.Bloomberg's index showing the performance of a 60-40 portfolio fell by about 17% last year.The confusion in the US bond market continues this year as well.Adding momentum to simultaneous selling of stocks and bonds.Accelerating the selling pressure.

Hedging with gold?
Experts in real return investment strategy at Newton Investment Management, Katherine Doyle, and Robeco's Chief Quant Strategist, Pim van Vliet, both believe that low volatility gold is useful for defensive portfolios.BlackRock's strategists in the research division indicated in a spring report this year that low volatility gold is useful for defensive portfolios."It is recommended to "dismantle the traditional asset allocation".and suggested that allocation to inflation-linked bonds and short-term bonds is desirable in terms of yield.

It provides a better return than cash.
On the other hand, JP Morgan,the 60-40 portfolio is not dead, outperforming cash assets by 4.1 percentage points over the next 10 years.indicating the likelihood. The interest rates on cash assets are seen as peaking. In addition to the traditional asset allocation, the company states that by complementing with alternative investments such as Private Equity (PE, unlisted stocks), real estate, commercial real estate loans, contributing 25% to the portfolio, investors can further push up returns by 0.6 percentage points annually over the next 10 years while keeping risks in check.