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Broken correlation

Oct 12, 2023

The classical US 60/40 portfolio composed of 60% of equities and 40% government bonds had another 7% loss over the last 3 months. From a historical perspective, these successive important drawdowns seen over the last 1 ½ years are truly remarkable. It looks like combining bonds and equities in portfolios to make them more defensive does no longer work. Equities and bonds used to be negatively correlated with bond prices up when equities down and vice versa. This correlation does no longer hold for many reasons. Portfolio managers therefore need to rethink the way they build their balanced portfolios. At ECP, we have a multi-asset solution in a UCITS format where we showcase our work and results. Have a look on www.ecp.lu

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Broken correlation

Oct 12, 2023