BlackRock Just Declared the 60/40 Portfolio Dead. Here's What Replaces It.

Key Points
The relationship between stocks and bonds that made the 60/40 portfolio work for decades is now broken.
High-quality AI stocks and emerging-market hard-currency debt remain attractive, according to BlackRock.
The 60/40 portfolio may be dead for now, but it could rise from the ashes if underlying dynamics change.
- 10 stocks we like better than Alphabet ›
Investment advisors have recommended the 60/40 portfolio for decades. The idea is to allocate 60% of your money to stocks and 40% to bonds. Following this allocation has helped investors diversify their portfolios in the past.
However, BlackRock (NYSE: BLK), the world's largest asset manager, has practically declared the 60/40 portfolio dead in a recent note to investors -- at least, for now. Is BlackRock right? If so, what will replace what has served as the de facto foundational rule of modern investing?
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Flipping the script
There's a simple reason why the 60/40 portfolio worked well for so long. Stocks and bonds have typically moved in opposite directions in the past. When the stock market fell, the bond market rose -- and vice versa. The problem now, though, is that stocks and bonds are often rising and falling together.
BlackRock noted that the S&P 500 (SNPINDEX: ^GSPC) fell during the week ending March 14, 2026, but government bonds offered "little refuge" as 10-year U.S. Treasury yields rose to 4.28%. When bond yields rise, bond prices fall.
What's going on to break the long-standing relationship between stocks and bonds? BlackRock explained, "Investors are demanding more compensation for the risk of holding long-term bonds given persistent inflation and high debt levels."
The fallout of the U.S. conflict with Iran has exacerbated the problem. With Iran disrupting traffic flow in the Strait of Hormuz, oil prices have soared. The result is that inflation is expected to rise. These expectations are driving bond yields higher, pushing bond prices lower.
Which investments work now
BlackRock acknowledged, "There are few places to hide from this near-term supply shock in our view. Government bonds and gold are not providing ballast as equities fall." If 60% in stocks and 40% in bonds is no longer the answer, what is?
Importantly, stocks remain a smart pick for investors -- but only certain stocks. BlackRock still likes U.S. equities, especially AI stocks. The asset manager believes that continued earnings growth, healthy profit margins, and strong balance sheets of large-cap tech companies focusing on AI make their stocks attractive. In other words, quality matters.
Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) stands out as an AI stock that meets BlackRock's criteria. Alphabet remains an advertising juggernaut, powered by Google Search and YouTube. Google Cloud's revenue is growing rapidly. The company is also a top player in AI and other related emerging technologies such as quantum computing.
How should investors diversify their portfolios? Some types of bonds are still alternatives. BlackRock likes emerging-market hard-currency debt, especially in countries that export commodities such as Brazil. One option for retail investors along these lines is the iShares J.P. Morgan USD Emerging Markets Bond ETF (NASDAQ: EMB). BlackRock itself manages this exchange-traded fund (ETF) and includes Brazil as one of its top bond issuers.
Time for a new playbook
To be clear, although the 60/40 portfolio with stocks and bonds may be dead, diversification remains very important for investors. Putting all of your eggs in one basket is still as big a mistake as ever. What has arguably changed is how portfolio diversification should be achieved.
Stocks will always be a critical component of a diversified portfolio. I agree with BlackRock about the underlying reasons for buying high-quality AI stocks. I also echo the asset manager's view that the valuations of some infrastructure stocks are attractive and that these stocks could benefit from "mega forces underpinning structural demand."
I would also include large-cap energy stocks such as Chevron (NYSE: CVX) in the current environment. With rising oil prices likely to drive inflation higher, Chevron -- the world's third-largest energy company and largest U.S. producer of natural gas -- should perform well.
Keep in mind, too, that the dynamics that have caused the long-term relationship between stocks and bonds to break may well be only temporary. The 60/40 portfolio might be like the phoenix in Greek mythology, rising from the ashes.
Should you buy stock in Alphabet right now?
Before you buy stock in Alphabet, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alphabet wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $495,179!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,058,743!*
Now, it’s worth noting Stock Advisor’s total average return is 898% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of March 24, 2026.
Keith Speights has positions in Alphabet and Chevron. The Motley Fool has positions in and recommends Alphabet and Chevron. The Motley Fool recommends BlackRock. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.