A 60/40 Portfolio’s Sharpe Ratio Performance

60/40 Portfolio’s Sharpe Ratio Performance

Over the last 40 years, the average Sharpe ratio of a traditional 60/40 portfolio has been 0.61. Since the Financial Crisis, the Sharpe ratio for the same portfolio has been nearly three times higher than the historical average, at 1.29. Investors need to decide whether it’s likely to maintain its elevated level for the next decade, or will it revert back towards the long term average.

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