Classic 60/40
StaticFreemoderateRobustness 0.97Based on research by Traditional
This is BestFolio's independent implementation. Not affiliated with or endorsed by the original author.
About this Strategy
The Classic 60/40 portfolio is the most widely referenced balanced allocation in finance, splitting 60% into US equities and 40% into US aggregate bonds. It has served as the default benchmark for balanced portfolios for decades. The logic is straightforward: equities provide long-term growth while bonds provide income and dampen volatility.
Strategy Rules
- 1Allocate 60% to SPY (S&P 500, US large-cap equities)
- 2Allocate 40% to AGG (Bloomberg US Aggregate Bond Index)
- 3Rebalance annually or when drift exceeds threshold
Asset Universe
2 instruments this strategy can hold
Key Differentiators
Research Source
Based on research by Traditional
Strategy Info
- Type
- Fixed / Strategic
- Frequency
- annual
- Next Rebalance
- Jan 409:30 ET (182d)
- Variants
- 1
- Risk Category
- moderate
- Regime
- Static
- Signal Date
- 2026-07-02
- Tags
- static, benchmark
- Type
- Fixed/Strategic Asset Allocation
- Trading Frequency
- Annual or on-drift rebalancing
- Number Of Holdings
- 2 ETFs
- Equity Allocation
- 60%
- Bond Allocation
- 40%
- Risk Level
- Moderate
Asset Classes
Classic 60/40 at a glance
Classic 60/40 is a fixed-allocation portfolio by Traditional across US Equity, US Bonds, rebalanced annual. Backtested 1922-12-29 to 2026-07-03 (103.5 years): 8.0% CAGR, 0.73 Sharpe, -65.8% max drawdown, 7.7% volatility.
- Type
- Fixed Allocation
- Author
- Traditional
- Rebalancing
- Annual
- Risk
- Moderate
- Period
- 1922-12-29 to 2026-07-03
- CAGR
- 8.0%
- Sharpe
- 0.73
- Max Drawdown
- -65.8%
- Volatility
- 7.7%
Classic 60/40 — Fixed Allocation Portfolio
The Classic 60/40 portfolio is the most widely referenced balanced allocation in finance, splitting 60% into US equities and 40% into US aggregate bonds. It has served as the default benchmark for balanced portfolios for decades. The logic is straightforward: equities provide long-term growth while bonds provide income and dampen volatility.
Classic 60/40: frequently asked questions
- What is Classic 60/40?
- The benchmark for balanced portfolios: 60% US stocks, 40% US bonds. Every other allocation is measured against this.
- Who created the Classic 60/40 strategy?
- Classic 60/40 was developed by Traditional.
- What is the historical return and maximum drawdown of Classic 60/40?
- Backtested from 1922-12-29 to 2026-07-03, Classic 60/40 returned 8.0% CAGR with a -65.8% maximum drawdown and a Sharpe ratio of 0.73. Past performance does not guarantee future results.
- How often is Classic 60/40 rebalanced?
- Classic 60/40 is rebalanced annual. BestFolio publishes the updated allocation signal each period.
- Is Classic 60/40 a fixed or tactical strategy?
- Classic 60/40 is a fixed-allocation (strategic) portfolio: it holds a set allocation and rebalances on schedule rather than rotating based on market signals.
Backtest Performance (1922-12-29 to 2026-07-03)
| Metric | Classic 60/40 |
|---|---|
| Compound Annual Growth Rate (CAGR) | 8.0% |
| Maximum Drawdown | -65.8% |
| Sharpe Ratio | 0.73 |
| Sortino Ratio | 0.96 |
| Annualized Volatility | 7.7% |
| Calmar Ratio | 0.12 |
| Total Return | 299803.6% |
| Backtest Period | 103.5 years |
Strategy Details
- Type
- Fixed / Strategic
- Rebalancing
- annual
- Risk Level
- moderate
- Variants
- 1
- Author
- Traditional
Asset Classes
- US Equity
- US Bonds
Track Classic 60/40 in Your Portfolio
Sign up for BestFolio to get monthly rebalancing signals, blend strategies into custom portfolios, and receive alerts when allocations change.
Related strategies
Related research
- We Extended Our Backtest to 1974. Here Is the 4% Rule Through the 1970s Stagflation.A few weeks ago we measured safe withdrawal rates across 50+ tactical strategies, and the fairest critique was that our data started in 1990. So we extended HAA's backtest to 1974, through the stagflation that nearly broke the 4% rule. The safe rate came down, and that makes it more believable.
- Which TAA Strategies Actually Work in Europe: A UCITS Substitution GuideEuropean investors hit a wall the moment they try to run a US TAA strategy through IBKR: PRIIPs blocks AVUV, DBC, and most US-domiciled ETFs from retail purchase. The substitutes exist on XETRA and LSE, but they're not all equal. Some strategies translate cleanly (HAA, GEM, Permanent Portfolio). Others lose 50 to 100bps of CAGR per year through methodology drift on the small-cap-value sleeve. A few don't really translate at all. Here's the working playbook, split into three tiers.
- Why 50+ TAA Strategies All Beat the 4% Rule (And Where Bengen Still Wins)We computed Bengen-style rolling 30-year safe withdrawal rates for 80 variants across 51 published TAA strategies. Every single one clears 4%. The best unleveraged TAA strategies (VAA-G4 SmartStack 15.3%, HAA SmartStack 14.2%) sustain real withdrawal rates 3-4x higher than Classic 60/40. Why TAA defeats sequence-of-returns risk, and four honest reasons you should still anchor your retirement plan closer to 4% than 15%.