The answer to the diversification question has long been the 60:40 portfolio. Combining bonds with equities had allowed investors to capture growth while mitigating drawdowns. It worked so well that many investors came to regard the negative correlation between equities and bonds as a permanent feature of markets.
Talaria co-CIO Hugh Selby-Smith notes however the conditions that supported the 60:40 are coming to an end, and bonds and equities are increasingly correlated. In fact, we have seen them fall together as recently as March 2026.
Where, then, can investors find genuine diversification?
