Is the 60/40 Portfolio Dead? What Expats Should Know About Building a Balanced Portfolio

Few phrases have been repeated more confidently in recent years than ‘the 60/40 portfolio is dead’. This idea first appeared after the tough market in 2022, and it comes up again whenever markets get shaky.

If you have a balanced portfolio or are thinking about starting one, it helps to look past the headlines. The real answer is more helpful and reassuring than the dramatic claims suggest.

This article explains what the 60/40 portfolio really is, why some people dismiss it, whether the criticism is fair, and what it means for expats investing in different currencies—an angle most articles miss.

What the 60/40 is, and the problem it solves

The ‘60/40’ is shorthand for a classic balanced portfolio: roughly 60% in shares (equities) and 40% in bonds.

The idea is simple. Shares act as your engine because they drive long-term growth, but they can be volatile. Bonds are meant to be the ballast, providing more stability and often holding up or even rising when shares fall. By combining both, you get a smoother experience than investing in shares alone. This means less stress during market crashes, while still benefiting from much of the market’s growth.

The key point that critics often miss is what the 60/40 portfolio was meant to do from the start. It was never supposed to prevent all losses, since no investment portfolio can do that. Its purpose is to make the investing journey smoother and reduce the impact of bad years. Losses are part of investing, but the 60/40 approach tries to make them less painful.

Why 2022 dented its reputation

For decades, especially from the 1980s through the 2010s, this approach worked as expected. Shares and bonds usually moved in opposite directions, so bonds helped cushion the impact when shares dropped. But in 2022, this pattern changed.

When inflation rose quickly and central banks sharply increased interest rates, both shares and bonds dropped at the same time. In other words, the ballast failed when it was needed most.

It was the worst year for the 60/40 portfolio in decades, with a double-digit loss and one of the longest declines the strategy had seen in a generation. Not surprisingly, this is when people started saying the ‘60/40 is dead’. Critics wondered: if bonds don't protect you during a downturn, what is their purpose?

Dead or just misunderstood?

This is where the ‘60/40 is dead’ headlines do not tell the full story. There are three important things to know:

It recovered

In the years after 2022, the 60/40 portfolio recovered well, and by 2025 bonds were once again helping to steady portfolios. In the end, one very bad year was just a rare shock, not proof that the idea no longer works.

Bonds are in better shape now

During the 2010s, bond yields were close to zero, so bonds gave little income and only a small safety net. Now, yields are much higher, so bonds once again provide real income and a stronger buffer against drops in shares than they did a few years ago.

The UK 10-year bond yield rose from 1.17 at the start of 2022 to just over 5 in May 2026. This makes the argument for holding bonds stronger than it has been in years.

The experts' verdict is ‘evolve, not abandon’

In 2026, most major investment firms have a more balanced view instead of a negative one.

Some experts believe the 60/40 portfolio will keep working, with occasional updates. Others suggest putting a bit more into bonds now that they offer better returns. Some recommend adding more types of bonds or other assets to spread risk further.

No serious experts suggest holding only shares. The main idea behind the 60/40—diversifying by combining assets that behave differently so one event does not ruin your portfolio—still makes sense. The debate is about the exact mix, not the basic principle.

So, the honest answer is that the 60/40 portfolio is not dead. However, you can no longer set it up and ignore it completely.

If it's evolving, into what?

When commentators talk about ‘updating’ the 60/40 instead of abandoning it, they usually mean one of a few things. None of these is a recommendation for your situation, but they are useful to understand:

• A modest tilt: Some suggest adjusting the split, either more towards shares for investors with long time horizons who can handle the ups and downs, or more towards bonds now that bonds pay real income again. The right direction depends entirely on the individual.

• Broadening the defensive side: Instead of holding only mainstream government and investment-grade bonds, some people spread the steadying 40% across a wider range of fixed income options. This diversifies the sources of stability and income.

• Adding other diversifiers: Others expand the mix beyond just shares and bonds, including assets expected to behave differently. The idea is that more independent building blocks can make the whole portfolio steadier.

The point is not that any one of these is the answer. The core idea of the 60/40 approach, which is to blend things that do not all move the same way, can be applied in more ways than a simple formula. Which option, if any, fits you depends on your situation. It is not a rule of thumb, and professional advice is recommended.

What this means for you as an expat

This is where the usual ‘is 60/40 dead?’ articles end, and where the part that matters most to you as an expat begins.

Here are three expat-specific points:

The currency layer almost everyone ignores

A 60/40 portfolio assumes your ‘safe’ 40% is truly safe. But safe in which currency?

If you are a British expat who will eventually spend in pounds, but your bonds are in dollars or euros, then currency swings can turn your supposedly stable safety net into another source of risk.

The steady part of your portfolio only works if it matches the currency you will actually spend. So, for expats, a ‘balanced’ portfolio must consider currency, not just the split between shares and bonds. We cover this in our articles on the cost of moving money and managing currency exposure.

Your split should reflect your horizon, not a headline

60/40 is a middle-of-the-road setting. Someone who will not need the money for decades might hold more in shares and ride out the ups and downs, while someone who needs the money soon may want more stability.

The right balance depends on your timeline and goals. This is a personal decision, not a one-size-fits-all number.

Don't let a scary year drive the decision

Abandoning a diversified strategy after one bad period is one of the most common and costly investing mistakes. You lock in the loss and often miss the recovery. It is the same behavioural trap we discussed in our article about how often you should check your portfolio.

The bottom line is, reacting to short-term noise usually hurts long-term investors more than the noise itself.

The takeaway

The 60/40 portfolio isn't dead, but it's not sacred either. It's a sensible starting framework whose underlying logic- diversification- remains as valid as ever, even as the ideal mix of ingredients evolves.

For an expat, the smarter questions aren't ‘is 60/40 dead?’ but ‘what balance suits my timeline’, and ‘is my portfolio built in a way that makes sense for the currency I'll spend?’

Those are questions worth answering with advice tailored to you, rather than a headline. If you'd like help thinking through how your portfolio is built — the balance, the diversification and the currency dimension — speak to Holborn Assets.