ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Energy Infrastructure
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Modern Alpha
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF of the Week Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Market Insights Channel
  2. The 60/40 Portfolio May Not Currently Fit
Market Insights Channel
Share

The 60/40 Portfolio May Not Currently Fit

Elle CarusoFeb 27, 2023
2023-02-27

As markets remain more challenged and complex than in the past decade, we believe advisors may need to rethink current allocations — leaving behind the 60/40 portfolio — to capture attractive returns going forward.

While portfolios comprising 60% stocks and 40% bonds became the cornerstone of diversification in the past decades, they have been battered in the past year. The 60/40 portfolio declined an average of 17% in 2022, and we imagine is not expected to fare better this year, as inflation is sticky and rates remain high.

“60/40 portfolios are not diversified portfolios for the investment environment that we’re currently in or that we think we’re going to be in,” Kristof Gleich, president and CIO of Harbor Capital Advisors, told VettaFi. “They are diversified portfolios [in] disinflationary and moderately growing and low inflationary environments. We believe they did really well in that.”

“But regimes shift, environments change, and we think we’re in a new one, and we feel the role of commodities is going to be — it’s a forgotten asset class,” Gleich added.

Gleich said he thinks that in this coming decade, commodities will prove to be an absolutely critical component to a diversified portfolio.

While commodities posted the strongest gain across all asset classes in 2022 and 2021, we suspect commodities remain well positioned for another year of outperformance. As both stocks and bonds saw negative returns last year, commodities helped to offset some of the losses in well-diversified portfolios.

“I also think commodities are an extremely inefficient asset class, and there are structural sources of alpha or return that you can tap into that are not overly complicated, but you need to find the right manager with the right experience and the right discipline, and we feel that we have that with Quantix,” Gleich added.

The Harbor Energy Transition Strategy ETF (RENW C) is sub-advised by Quantix, which has extensive experience investing, trading, and developing innovative commodities strategies.

“I also believe commodities is not a do-it-yourself asset class. It’s not like you can just buy a stock. I really think it takes a professional that knows what they’re doing,” Gleich said. “I wouldn’t invest or speculate on individual commodities because you have to get the fundamental call right. For instance, which commodity to own, and then you have to get the technical call, which is where across the curve do you invest in that because you can’t buy the physical.” 

For more news, information, and analysis, visit the Market Insights Channel.

Investors should carefully consider the investment objectives, risks, charges, and expenses of a Harbor fund before investing. To obtain a summary prospectus or prospectus for this and other information, visit harborcapital.com or call 800-422-1050.  Read it carefully before investing.

All investments involve risk, including the possible loss of principal. Please refer to the Fund’s prospectus for additional risks associated with the Fund. For the Fund’s prospectus and most current performance, please click: RENW

The views expressed herein are those of Harbor Capital Advisors, Inc. investment professionals at the time the comments were made. They may not be reflective of their current opinions, are subject to change without prior notice, and should not be considered investment advice.

Commodity Risk: The Fund has exposure to commodities through its and/or the Subsidiary’s investments in commodity-linked derivative instruments. Authorized Participant Concentration/Trading Risk: Only authorized participants (“APs”) may engage in creation or redemption transactions directly with the Fund. Commodity-Linked Derivatives Risk: The Fund’s investments in commodity-linked derivative instruments (either directly or through the Subsidiary) and the tracking of an Index comprised of commodity futures may subject the Fund to significantly greater volatility than investments in traditional securities.

Energy Transition Risk: The commodities included in the Index may become less representative of energy transition trends over time, and the Fund’s investments may be significantly impacted by government and corporate policies.

A “60/40 portfolio” is a guidepost portfolio for a moderate risk investor. Portfolio allocations of 60% to equities to seek capital appreciation and 40% allocation to fixed income help mitigate risk and offer potential income.

Diversification in an individual portfolio does not assure a profit.

Alpha is a measure of risk (beta)-adjusted return.

Quantix Commodities, LP is the subadvisor for the Harbor Energy Transition Strategy (RENW).

This article was prepared as Harbor Funds paid sponsorship with VettaFI.

Foreside Fund Services, LLC is the Distributor of the Harbor ETFs.

2750824

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X