November Surge for Traditional 60-40 Portfolio

A traditional mix of stocks and bonds has experienced significant growth in November, resulting in the strongest monthly performance for the 60-40 portfolio since 2020, according to Bespoke Investment Group.

Impressive Returns for the Classic Portfolio

The 60-40 portfolio, consisting of 60% stocks and 40% bonds, has surged approximately 7.3% this month on a total return basis, as reported by Bespoke in an emailed note. This marks the most promising performance for the portfolio since April 2020, potentially becoming the second-best in over 30 years.

Favorable Market Conditions

November has witnessed substantial gains in the U.S. stock market, with the S&P 500 index rising by 8.3%, potentially achieving its strongest month since July 2022, according to FactSet data. In addition, the iShares Core U.S. Aggregate Bond ETF (AGG) is on track for its most significant monthly total return since December 2008, with approximately a 4.7% increase in November based on Thursday afternoon trading.

Drawdown Despite November Surge

Despite the remarkable surge this month, total returns for the 60-40 stocks-bonds portfolio remain in a drawdown phase, notes Bespoke. The total return index is currently lower compared to the peak in July, let alone the all-time highs from December 2021.

Extended Drawdown Period

Interestingly, the portfolio has traded below its "high water mark" for an extended period of 23 months, making it the third-longest drawdown since at least 1975, as indicated by Bespoke.

Promising Outlook

However, there is hope as historically substantial gains have typically led to further advances for the 60-40 portfolio.

Current Market Snapshot

At the time of writing, the U.S. stock market showed mixed performance. The S&P 500 was down 0.2%, while the technology-heavy Nasdaq Composite fell 0.8%. On the other hand, the Dow Jones Industrial Average climbed 0.8% according to FactSet data.