65/35 has been hard to beat relative risk/reward

  • For long term investors, a 65/35 allocation has produced no negative return since 1990 for a rolling 7 or 10 year period.
  • With maximum gain of 14.09% (7 year) and 11.93% (10 years)
  • Median gain of 5.66% (7 year) and 6.74 (10 year)
  • Risk SD of 2.9 (7 year) and 2.2 (10 year)

What is an “Alternative” replacing.

If an alternative is replacing part or all of the 65/35 then the addition of alternatives should exceed the run over the rise of 65/35, net of fees.  If 65/35 represents being a diversified owner and lender globally, then an alternative is:  part of, combination of, and or characteristics of some stock and bond blend.  If true, separating 65/35 to carve out an alternative theoretically will not give you more but will give you less volatility, including upside vol. with lower net return because of fee.

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