60/40 Portfolio (classic stocks and bonds)
The classic balanced portfolio: 60% in the S&P 500 and 40% in intermediate (7–10 year) Treasuries, rebalanced back to 60/40 every month. It is the mix every Tactfolio classic is compared with.
The traditional balanced mix, held by balanced funds for about a century and the usual yardstick for tactical strategies. Implemented and tracked by Tactfolio.
| Jul 2002 – Sep 2026 | Strategy | SPY |
|---|---|---|
| Annual return (CAGR) | 8.4% | 11.3% |
| Worst drawdown | -32.6% | -55.2% |
| Sharpe ratio | 0.82 | 0.66 |
| Volatility | 10.6% | 18.8% |
| Annual return since publication (Jan 2026) | — | — |
| Jan 1962 – Sep 2026 | Strategy | SPY |
|---|---|---|
| Annual return (CAGR) | 9.0% | 10.5% |
| Worst drawdown | -32.6% | -55.2% |
| Sharpe ratio | 0.91 | 0.69 |
| Volatility | 10.1% | 16.5% |
| Annual return since publication (Jan 2026) | — | — |
The 60/40 portfolio is the classic balanced mix of 60% stocks and 40% bonds, long the default for pension funds and balanced mutual funds and popularized for individual investors by Vanguard founder John Bogle. This version holds 60% in the S&P 500 and 40% in intermediate Treasuries, rebalanced every month, and it is the 60/40 yardstick every Tactfolio classic is compared with.
The idea#
Stocks provide most of the long-run growth but can lose half their value in a bad bear market. High-quality bonds earn less but usually hold up, or rise, when a recession pushes stocks down and interest rates lower. Holding both gives a smoother ride than stocks alone while keeping much of their return.
Rebalancing adds discipline. Resetting to 60/40 sells some of whichever asset has risen and buys the one that has fallen, so the portfolio's risk stays roughly constant instead of drifting toward stocks after long bull markets. Bogle's advice was to pick a sensible mix, keep costs low, and stay the course rather than time the market.
How it works#
- Hold 60% in US large-cap stocks (SPY) and 40% in 7–10 year Treasuries (IEF).
- At the close of the last trading day of each month, reset both to their target weights.
Portfolio Charts' version of the classic 60/40 uses the same two asset classes and rebalances once a year instead.
What the backtest shows#
Over the ETF era, from mid-2002, the 60/40 returned about 8% a year against 11% for the S&P 500, with a little over half the volatility. Its worst drawdown was about 33%, against 55% for the S&P 500, and its risk-adjusted return was clearly higher.
Its worst drawdown came in the 2008 financial crisis, from December 2007 to March 2009, and was recovered by October 2010. In 2008 it lost 18% while the S&P 500 lost 37%, as Treasuries rose. The weak spot showed in 2022: stocks and bonds fell together as interest rates rose, and it lost 17%, nearly as much as the S&P 500.
With simulated history the test starts in 1962 and returns about 9% a year, a point and a half less than the S&P 500, again with a much better risk-adjusted return. It cushioned the bear markets of 1973–1974 and 2000–2002, and 2008 remains its deepest loss.
Many classic strategies on Tactfolio fail to beat this simple mix on risk-adjusted return, which is why every article reports it alongside the S&P 500.
When it struggles#
- Stocks and bonds falling together. When inflation and interest rates rise, as in 2022, bonds stop offsetting stock losses.
- Long bear markets. With 60% in stocks, a deep and lasting decline still hurts, as in 2008.
- Strong bull markets. It trails an all-stock portfolio whenever stocks rise quickly.
Using it on Tactfolio#
The live strategy above holds SPY and IEF and rebalances monthly. Copy it to try a 70/30 or 50/50 split, a total bond fund such as AGG, or compare it with Livingston's 50/50 Baby Bear and the All Weather Portfolio.
Year by year
| Year | Strategy | SPY |
|---|---|---|
| 2026* | 6.7% | 14.0% |
| 2025 | 13.9% | 17.7% |
| 2024 | 14.1% | 24.9% |
| 2023 | 16.8% | 26.2% |
| 2022 | -16.7% | -18.2% |
| 2021 | 15.0% | 28.7% |
| 2020 | 16.0% | 18.3% |
| 2019 | 21.8% | 31.2% |
| 2018 | -2.0% | -4.6% |
| 2017 | 13.7% | 21.7% |
| 2016 | 7.7% | 12.0% |
| 2015 | 1.7% | 1.2% |
| 2014 | 11.8% | 13.5% |
| 2013 | 15.6% | 32.3% |
| 2012 | 11.1% | 16.0% |
| 2011 | 7.7% | 1.9% |
| 2010 | 13.5% | 15.1% |
| 2009 | 12.6% | 26.4% |
| 2008 | -18.0% | -36.8% |
| 2007 | 7.4% | 5.1% |
| 2006 | 10.4% | 15.8% |
| 2005 | 4.1% | 4.8% |
| 2004 | 8.1% | 10.7% |
| 2003 | 18.8% | 28.2% |
| 2002* | 1.7% | -2.1% |
| Year | Strategy | SPY |
|---|---|---|
| 2026* | 6.7% | 14.0% |
| 2025 | 13.9% | 17.7% |
| 2024 | 14.1% | 24.9% |
| 2023 | 16.8% | 26.2% |
| 2022 | -16.7% | -18.2% |
| 2021 | 15.0% | 28.7% |
| 2020 | 16.0% | 18.3% |
| 2019 | 21.8% | 31.2% |
| 2018 | -2.0% | -4.6% |
| 2017 | 13.7% | 21.7% |
| 2016 | 7.7% | 12.0% |
| 2015 | 1.7% | 1.2% |
| 2014 | 11.8% | 13.5% |
| 2013 | 15.6% | 32.3% |
| 2012 | 11.1% | 16.0% |
| 2011 | 7.7% | 1.9% |
| 2010 | 13.5% | 15.1% |
| 2009 | 12.6% | 26.4% |
| 2008 | -18.0% | -36.8% |
| 2007 | 7.4% | 5.1% |
| 2006 | 10.4% | 15.8% |
| 2005 | 4.1% | 4.8% |
| 2004 | 8.1% | 10.7% |
| 2003 | 18.8% | 28.2% |
| 2002 | -7.7% | -21.6% |
| 2001 | -4.2% | -11.8% |
| 2000 | -0.1% | -9.7% |
| 1999 | 9.0% | 20.4% |
| 1998 | 23.0% | 28.7% |
| 1997 | 24.1% | 33.5% |
| 1996 | 13.5% | 22.5% |
| 1995 | 32.1% | 38.0% |
| 1994 | -2.2% | 0.4% |
| 1993 | 11.0% | 9.7% |
| 1992 | 7.8% | 7.6% |
| 1991 | 25.9% | 30.3% |
| 1990 | 1.4% | -3.2% |
| 1989 | 25.5% | 31.5% |
| 1988 | 12.6% | 16.4% |
| 1987 | 4.2% | 5.1% |
| 1986 | 19.5% | 18.6% |
| 1985 | 30.4% | 31.6% |
| 1984 | 9.7% | 6.2% |
| 1983 | 14.6% | 22.4% |
| 1982 | 27.7% | 21.6% |
| 1981 | -0.5% | -4.9% |
| 1980 | 19.3% | 32.4% |
| 1979 | 12.0% | 18.3% |
| 1978 | 4.0% | 6.5% |
| 1977 | -4.0% | -7.2% |
| 1976 | 20.9% | 23.8% |
| 1975 | 24.2% | 37.1% |
| 1974 | -15.0% | -26.5% |
| 1973 | -7.5% | -14.7% |
| 1972 | 12.4% | 18.9% |
| 1971 | 12.5% | 14.1% |
| 1970 | 9.3% | 3.9% |
| 1969 | -6.3% | -8.4% |
| 1968 | 7.4% | 10.9% |
| 1967 | 12.9% | 23.8% |
| 1966 | -4.3% | -10.1% |
| 1965 | 7.6% | 12.4% |
| 1964 | 11.2% | 16.4% |
| 1963 | 13.9% | 22.7% |
| 1962* | -0.7% | -8.1% |
* Partial year.
The rules as implemented
This is the exact tree Tactfolio runs, rebalanced monthly with signals and trades at the close. Open it to inspect or copy it.
- StrategyClassic 60/40 Portfolio
- WeightSpecified
- TickerSPY60%
- TickerIEF40%
- WeightSpecified
Sources and caveats
- SPY stands in for US large-cap stocks and IEF for intermediate Treasuries.
- Portfolio Charts rebalances once a year; this version rebalances at each month end, matching the 60/40 yardstick in every Tactfolio classic's results.
Common questions#
What is a 60/40 portfolio?#
It is a portfolio with 60% in stocks and 40% in bonds, rebalanced back to those weights from time to time. It is the most common benchmark for a balanced investor.
What ETFs make a 60/40 portfolio?#
This version uses SPY for stocks and IEF for intermediate Treasuries. Many investors use a total stock market fund such as VTI and a total bond fund such as BND or AGG instead.
How often should a 60/40 portfolio be rebalanced?#
Common choices are monthly, quarterly, or yearly. This version rebalances monthly to match the yardstick used across Tactfolio; yearly rebalancing trades less.
Is the 60/40 portfolio dead?#
It had a very bad year in 2022, when stocks and bonds fell together. Over the full test it still earned about 8% a year with a much smaller drawdown than stocks. The live record on Tactfolio shows how it is doing now.