The 60-40 Portfolio Proves That Boring Can Be Beautiful

In science and philosophy, “Occam’s Razor” is a tenet hypothesizes that the simplest answer to a question is usually the best answer.

Perhaps the long-used 60-40 retirement portfolio should be called “Occam’s Allocation.”

In a panel discussion about the long-used balanced retirement portfolio with 60 percent of its assets allocated to equities, and 40 percent to fixed income, Dan Moisand, partner in Mosaind, Fitzgerald and Tamayo, said that advisors were best served offering simple, low-cost strategies to their clients.

“We rebalance periodically, we keep costs low, and there’s nothing exciting in what happens in the investment portfolios of our clients,” said Moisand. “I’m comfortable with keeping it that way for the future… for 26 years, I’ve been told that I’m an idiot, but we keep making money, and our clients keep achieving their goals.”

Most of the panel’s participants agreed that simple strategies using low-cost investments were most likely to lead to successful portfolios.

Russell Hill, chairman and CEO of Halbert Hargrove Global Advisors, said that might not be enough to retain clients moving forward.
Source: FA Magazine

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