Since the establishment of Modern Portfolio Theory in the 1950s, the 60/40 portfolio has been the “set it and forget it” gold standard of investing. Its logic was simple – when stocks took a tumble, bonds acted as the shock absorber.
But, in 2026, that spring has gone damp. Bonds are no longer behaving like the defensive anchor they once were.
Recent research from KKR confirms what investors might already have suspected – a fraying relationship between stocks and bonds. Instead of moving in opposite directions, the two asset classes are becoming increasingly positively correlated. When the “risk-off” switch is flipped, both sides of the traditional portfolio are now bleeding at the same time.
The Great Repositioning
This shift isn’t just a theoretical headache for retail investors; the world’s biggest “smart money” players have been front-running this reality for years.
Norway’s $2.1 trillion Sovereign Wealth Fund, the world’s largest, has slowly rewritten its playbook. Once a conservative giant with roughly 40% in equities in the late 2000s, the fund has pushed its equity exposure as high as 70%.
Yet, despite …
This post was originally published here
