Citadel CEO says 60/40 portfolio more attractive after yields spike

BY Reuters | TREASURY | 09/28/22 02:58 PM EDT

NEW YORK, Sept 28 (Reuters) - Recent increases in U.S. Treasury yields are set to improve the attractiveness of investment strategies such as the 60/40 portfolio, said Ken Griffin, the billionaire founder of Citadel Securities, one of the world's biggest market-making firms.

"The 60/40 portfolio is much better today than at any point in recent time," he said, speaking at an investment conference in New York on Wednesday, and with reference to a common investment strategy which splits allocations between stocks and bonds on a 60%/40% basis to mitigate risk.

Yields on the 10-year benchmark government bonds topped 4% on Wednesday, hitting a 12-year high. "Right now, that's a much more compelling value proposition than it was back then at 1% yield," Griffin said. (Reporting by Carolina Mandl and Davide Barbuscia in New York)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.