Bonds in the interest rate trap: Why the classic 60/40 strategy has had its day
Bonds pay -1.2% real return. The 60/40 strategy is dead. Huber shows: asset-focused allocation is now essential.
Why the classic 60/40 strategy is deadly
Huber shows with data (Figure 61, 62): Bonds are no longer safe. You no longer pay interest.
-1,2%
Real yield of German 10-year bonds
If you buy a bond that pays 1.5% but inflation is 2.7%, you lose 1.2% per year in purchasing power. This is the mathematical reality.
Real bond yields: nominal minus inflation
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Academic source: Master Thesis
Development of optimal asset allocation in times of expansionary monetary and fiscal policy
Daniel Huber, M.A. — Mainz University of Applied Sciences, 2020 | Supervised by Prof. Dr. Arno Peppmeier
13,174 words · 92 figures · 39 tables · Markowitz efficiency line analysis
Download full thesis (PDF, 6 MB) →
Daniel Huber, M.A. — Mainz University of Applied Sciences, 2020 | Supervised by Prof. Dr. Arno Peppmeier
13,174 words · 92 figures · 39 tables · Markowitz efficiency line analysis