Despite headlines declaring the “death” of the 60/40 portfolio, at Howe & Rusling we remain committed to its core principles (Investopedia) of why traditional asset allocation matters. While 2022 proved to be a challenging year for both stocks and bonds (Morgan Stanely), we continue to believe that thoughtfully diversified portfolios built on time-tested principles offer a resilient framework for long-term investing.  

Here at Howe & Rusling, we believe a portfolio built from stocks, bonds, and ETFs is sufficient for most investors’ long‑term objectives because it delivers the three things that tend to matter most: return potential, risk management, and practicality. 

Stocks for growth 

First, stocks have historically provided the primary engine for long‑term growth. While there have been periods in history where stocks struggle, generally if an investor is patient, these investments can help grow wealth. Diversified equity exposure captures market returns across sectors and company sizes and geographic areas, which historically have outpaced inflation and produced the compounded returns needed to meet long‑term goals.  

Bonds for stability and income 

Second, bonds supply ballast: predictable income, lower volatility, and lower correlation to stocks at times when equities fall. There have been periods where bonds have had a higher correlation to stocks and 2022 is the most recent example. That stability may reduce sequence‑of‑returns risk, or the danger that the order and timing of investment returns—especially large negative returns—occur during the period you are withdrawing money, such as in retirement. Because of this, bonds may smooth the path to goals such as retirement, education funding, or legacy transfers. With interest rates at their highest levels in many years, bonds may play a meaningful role in portfolio construction. Together, a deliberate allocation between stocks and bonds lets you tune return versus risk to your personal time horizon and tolerance. 

Exchange-Traded Funds 

Third, ETFs, or exchange-traded funds may offer relatively low expense ratios, intraday liquidity, and transparent holdings compared to some other investment vehicles. ETFs may provide an efficient way to gain market exposure and can help support diversification. ETFs may also help streamline implementation tasks such as rebalancing, tax management, and portfolio monitoring. These operational considerations can be important because costs and execution may influence overall outcomes. 

What about alternative investments as an asset class? 

By contrast, there are alternatives, which have become more “mainstream” in their popularity and reputation as of late. These are investments like private equity, private credit, hedge funds, and structured notes, which introduce real tradeoffs: limited liquidity and long lock‑ups, opaque and infrequent reporting, high and layered fees, and complexity that makes it quite hard to measure or control risk. They can add value in specialized cases (very high‑net‑worth investors, concentrated liability matching, or taxable‑sensitive strategies), but for most investors those drawbacks outweigh potential incremental returns. Importantly, many “alternative” exposures can now be accessed through ETFs or diversified public-market strategies that retain liquidity and transparency without sacrificing the intended payoff. 

In short:

 we continue to like stocks for growth, bonds for stability and income, and ETFs for efficient implementation in an attempt to give clients a low‑cost, liquid portfolio in which we know what we own and why. It’s one that attempts to capture market returns, manages risk, and is easy to maintain. We believe that combination is sufficient—and possibly even superior—for achieving long‑term investment objectives for many investors. Stocks, bonds, and ETFs remain sufficient for most long‑term goals, and we can further enhance outcomes by adjusting allocations and applying tactical strategies within those asset classes. By shifting the stock/bond mix we align risk with your time horizon and goals, and within those buckets we can also implement tactical and strategic tilts without resorting to illiquid, high‑fee alternatives. 

Markets evolve; asset classes shift. But the core principles of diversification, discipline, and transparency remain constant.

By focusing on quality traditional investments and tailoring them to each client’s needs, we aim to provide our clients with a foundation that adapts across market cycles — helping them stay on course toward their objectives. 

Disclosures: The information contained herein is provided for informational and educational purposes only and should not be considered, and does not constitute, personalized investment advice or a recommendation to engage in any particular investment strategy. The views expressed reflect the opinions of Howe & Rusling at the time of publication and are subject to change without notice. Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results. Asset allocation, diversification, and the use of stocks, bonds, exchange-traded funds (“ETFs”), or other investment vehicles do not ensure a profit or protect against loss in declining markets. No investment strategy can eliminate the risk of fluctuating prices and uncertain returns. Any forward-looking statements or projections about future market conditions, asset class behavior, or portfolio outcomes are based on current beliefs and assumptions, which may prove inaccurate. Actual results and market conditions may differ materially. References to the historical behavior of stocks, bonds, or other asset classes are not indicative of their future performance. While ETFs may offer benefits such as transparency or potentially lower expenses compared to certain other vehicles, these characteristics vary widely by fund. ETFs are subject to market volatility and the risks of their underlying holdings, and they may trade at a premium or discount to net asset value. Investors should review a fund’s prospectus before investing. Descriptions of characteristics, risks, and potential drawbacks of alternative investments—such as private equity, private credit, hedge funds, or structured notes—are general in nature and may not apply to any specific offering. Alternative investments are complex and often involve unique risks, including limited liquidity, higher fees, and transparency considerations. Whether such investments are appropriate depends on an investor’s individual financial circumstances, objectives, and risk tolerance. References to third-party data or publications (e.g., Investopedia, Morgan Stanley) are believed to be from reliable sources; however, Howe & Rusling cannot guarantee the accuracy, completeness, or timeliness of such information. Third-party references do not imply endorsement of Howe & Rusling or its services, nor does Howe & Rusling endorse any third-party content. Howe & Rusling did not provide compensation to, or receive compensation from, any third-party media outlets or data providers referenced in this material in exchange for inclusion, citation, or coverage.  Any discussion of the benefits of traditional asset allocation, the 60/40 framework, or other investment approaches reflects general principles and is not a guarantee of superior results. References to portfolio construction frameworks or “time-tested principles” describe broad concepts, not assured outcomes or firm-specific performance. The concepts discussed may not be suitable for all investors. The appropriate allocation between stocks, bonds, ETFs, alternatives, or other strategies depends on an investor’s personal situation, financial goals, tax status, liquidity needs, and risk tolerance. Clients should consult directly with Howe & Rusling or another qualified financial professional before implementing any strategy. Howe & Rusling is an SEC-registered investment adviser. Registration does not imply a certain level of skill or training.