Private markets shine as 60/40 faces headwinds

Apollo Global Management highlights that traditional 60/40 portfolios face headwinds due to high valuations, persistent inflation, and prolonged elevated interest rates. These conditions—along with stronger correlations between stocks and bonds—challenge the effectiveness of the classic 60/40 allocation model.

Historically, such environments have marked attractive entry points into private markets, the asset manager points out. “Adding private markets to a 60/40 portfolio has historically enhanced returns while minimising volatility, boosting returns per unit of risk across market cycles,” says Matthew O’Mara, Co-Head of Apollo Aligned Alternatives.

He suggests that now may be a compelling time for investors to consider a broader, more balanced portfolio that includes private market exposures.

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