"The 60/40 Stock-and-Bond Allocation Has Reached Its Limits—Diversify with Gold and Bitcoin"

[Financial News] An analysis has found that investors should move beyond the traditional asset-allocation strategy of holding 60% stocks and 40% bonds and add gold and Bitcoin to their portfolios. The diversification benefits of the conventional strategy have weakened as stock and bond prices have recently begun moving in tandem.
Wooyeol Park, a senior researcher at Shinhan Investment & Securities, presented an ETF-based asset-allocation strategy consisting of 60% stocks, 30% bonds, 8% gold, and 2% Bitcoin. He made the proposal under the theme "Broadening the ETF Market" at the KRX Press Corps–Securities Analysts Meeting held at the Korea Exchange in Yeouido, Seoul, on the 8th.
Park said, "Previously, stocks and bonds were allocated at a 60-to-40 ratio based on the expectation that bonds would provide protection when stock prices fell. Recently, however, stocks and bonds have been rising or falling together, meaning the traditional asset-allocation strategy is no longer working properly."
Shinhan Investment & Securities operates a model portfolio that maintains a 60% allocation to stocks, reduces bonds to 30%, and assigns the remaining 10% to alternative assets. Within the alternative-asset allocation, gold and Bitcoin account for 8% and 2%, respectively. However, this is a model portfolio intended to present an investment strategy, not a product that manages actual client assets.
Park explained, "When we modeled the allocation between gold and Bitcoin, an 8-to-2 ratio produced the best results in terms of risk-adjusted performance. Since this year, we have included Bitcoin at a 2% weighting and have been monitoring the results."
He assessed South Korean stocks as undervalued relative to corporate earnings expectations. Park said, "Earnings estimates for Korean companies have not turned downward, but as stock prices fell, the price-to-earnings ratio (PER) dropped to near-bottom levels. Earnings momentum remains solid, but it is a concern that fund flows from institutions, foreign investors, and retail investors have all been weak."
The Dow Jones Dividend Index was named the top pick for the month. Unlike domestic dividend indexes, which have high weightings in financial and telecommunications stocks, the U.S. dividend index is centered on energy, healthcare, and consumer staples, allowing investors to gain exposure to sectors that have recently led the market, the explanation said.
Park said, "A dividend-stock ETF brings together companies with strong cash flows amid continuing geopolitical risks. We are positive on U.S. dividend stocks, healthcare, and energy ETFs. Among commodities, we favor gold, supported by central-bank purchases and demand for hedging against geopolitical risks."

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