Is the traditional balanced portfolio still relevant?

Nick Little - August 3, 2026

Author: Nick Little, Principal Financial Adviser at Professional Private Wealth

Higher interest rates have changed the investment landscape. Some commentators say the classic 60/40 portfolio is finished — but is it really? Here’s why reports of its demise may be greatly exaggerated.

Are the 40/60 or 60/40 portfolios dead?

For decades, one of the most widely used investment strategies has been the balanced portfolio — typically around 60% invested in shares for long-term growth and 40% in defensive assets such as bonds and cash to help reduce risk. Or for the more conservative investor, the inverse of this — with around 40% in shares and 60% in defensive assets.

After both shares and bonds fell sharply during 2022, many commentators declared the traditional balanced portfolio “dead”.

So, is it?

The short answer is: probably not.

Why did people lose confidence?

Historically, bonds have often provided stability when share markets struggled.

However, during 2022, rapidly rising inflation and interest rates caused both shares and bonds to fall at the same time — something that hadn’t happened on such a scale for many years.

That led many investors to question whether diversification still worked.

The landscape has changed

Ironically, the very reason bonds struggled may now be one of their biggest strengths.

After years of extremely low interest rates, quality bonds now offer significantly higher income than they did just a few years ago.

That means they once again have greater potential to provide both income and diversification within a portfolio.

Diversification still matters

No one knows which asset class will perform best each year.

Some years shares lead. Other years defensive assets provide better protection.

A diversified portfolio accepts that you won’t always own the best-performing investment — but you’re also less likely to own the worst.

For retirees drawing regular income, reducing large swings in portfolio values can be just as important as maximising returns.

It’s about the right mix — not a magic formula

There’s nothing special about exactly 60/40 or 40/60.

The appropriate mix depends on your goals, time horizon, income needs and tolerance for investment risk.

Some investors may need more growth, while others may benefit from holding more defensive assets.

The key isn’t finding a perfect formula — it’s having an allocation that’s appropriate for your circumstances and sticking with it.

Nick’s Take

Investment strategies are often declared “dead” after a difficult period, only to be praised again a few years later.

Rather than chasing whatever has performed best recently, successful investing usually comes back to maintaining an appropriate level of diversification and reviewing your portfolio as your circumstances evolve.

The balanced portfolio isn’t obsolete. As always, the best portfolio isn’t the one making headlines. It’s the one that’s aligned with your long-term financial goals and gives you confidence to stay invested through all market conditions.

If you’re questioning whether your current investment mix is still right for today’s market, you should review it. Every portfolio should reflect your goals, not the latest headlines. Get in touch with Professional Private Wealth to book a conversation with Nick on 0408 702 056 or click below.

IMPORTANT INFORMATION

The information provided in this communication is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information in this communication you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.

This communication may contain certain ‘forward looking’ statements. Forward looking statements, opinions and estimates provided are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward-looking statements including projections, indications or guidance on future earnings or financial position and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. There can be no assurance that actual outcomes will not differ materially from these statements.

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