---
title: Goodbye 60/40, Hello 50/30/20
description: Explore the evolving investment landscape as shifting interest rates, rising debt, and demographic changes create new opportunities beyond dominant tech giants. Discover where future growth may lie.
image: https://blog.longshortadvisors.com/hubfs/Goodbye%206040%20Hello%20503020.jpg
---
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[May 06, 2025](https://blog.longshortadvisors.com/news-insights/goodbye-60-40-hello-50-30-20)
Four months into 2025, financial markets and the economy continue to struggle with policy uncertainty emanating from Washington, D.C., particularly around the Trump Administration’s chaotic (and shifting) implementation of import tariffs. Since markets hate uncertainty, the lack of clarity is taking a toll on stock prices and the economy.
After a strong year of economic growth in 2024 (+2.8%), the GDP contracted in the first quarter of 2025, and many economists think that waning consumer confidence and confused corporate managements that are reluctant to invest aggressively portend slower growth ahead. U.S. stocks (as measured by the S&P 500 Index) lost 6% from January to April 2025, and after many years of outperformance trailed foreign stocks (MSCI ACWI ex-USA) by 15 percentage points. Volatility levels for U.S. stocks, as measured by VIX, have surged to some of the highest levels on record.
Signs of capital flight from the U.S. abound (including from U.S. equities). The value of the U.S. dollar has slumped nearly 10% from its January 2025 high (per DXY, the Dollar Index Spot). Even the U.S. Treasury market hasn’t played its normal safe-haven role, and has been marked by elevated volatility (gold, by contrast, is enjoying a banner year). Many pundits are questioning whether a period of “U.S. exceptionalism” has come to an end.
**A New Investment Regime**
It's particularly during nervous times like these that financial advisors can really prove their value to clients. High volatility in markets typically causes anxious individual investors to act first, think later, cut exposure or even exit stocks and other risky assets and sometimes even abandon long-term strategic allocations. Advisors can help clients navigate temporarily stormy seas and maintain an appropriate allocation to stocks, the growth portion of a typical long-term portfolio.
There is more than one way to adjust their portfolios, but many investment strategists recommend adding an allocation to alternative investments to a traditional 60/40 stock and bond portfolio. This may result in a new 50/30/20 split, with the new 20% weighting earmarked for alternative investment classes that, ideally, move out of sync with both stocks and bonds.
In fact, a growing body of investment research shows that hedging assumptions behind the 40% allocation to Treasuries and investment-grade corporate bonds are flawed, or at least out of date. The strategy generally *did* work for 40 years to 2022, but this was due to an exceptional period in financial history when interest rates declined almost steadily. That regime came to a crashing halt in 2022 when the Fed embarked on its interest-rate hiking cycle. Since then, correlations have broken down and (as also witnessed this year) we can no longer assume that prices of stocks and high-quality bonds move in the opposite direction.
As a portion of the 20% alternatives sleeve, an allocation to a long-short, absolute-return fund such as the Long Short Opportunity Fund (LSOFX) has appeal since it reduces equity portfolio volatility (by nearly 50% in the case of Long Short) and downside risk while keeping clients invested in equity markets. So perhaps we can say goodbye to the 60/40 strategy and hello to 50/30/20.
##### Recent News & Insights
[ ](https://blog.longshortadvisors.com/news-insights/lsofx-q3-2025-shareholder-letter)
###### [LSOFX Q3 2025 Shareholder Letter](https://blog.longshortadvisors.com/news-insights/lsofx-q3-2025-shareholder-letter)
[October 24, 2025](https://blog.longshortadvisors.com/news-insights/lsofx-q3-2025-shareholder-letter)
[ ](https://blog.longshortadvisors.com/news-insights/bank-ma-could-be-poised-for-a-comeback)
###### [Portfolio Manager Insights: Bank M&A Could Be Poised For a Comeback](https://blog.longshortadvisors.com/news-insights/bank-ma-could-be-poised-for-a-comeback)
[August 28, 2025](https://blog.longshortadvisors.com/news-insights/bank-ma-could-be-poised-for-a-comeback)
[ ](https://blog.longshortadvisors.com/news-insights/lsofx-q2-2025-shareholder-letter)
###### [LSOFX Q2 2025 Shareholder Letter](https://blog.longshortadvisors.com/news-insights/lsofx-q2-2025-shareholder-letter)
[July 16, 2025](https://blog.longshortadvisors.com/news-insights/lsofx-q2-2025-shareholder-letter)
##### LSOFX Quick Links
[](https://cta-redirect.hubspot.com/cta/redirect/4808633/db6299b5-cf49-40b0-9862-bd99dc7be4c6)
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**You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Fund before investing. The Fund's prospectus contains this and other information about the Fund, and should be read carefully before investing. You may obtain a current copy of the Fund's prospectus by calling (877) 336-6763. **
Investment in shares of a long/short equity fund have the potential for significant risk and volatility. A short equity strategy can diminish returns in a rising market as well as having the potential for unlimited losses. These types of funds typically have a high portfolio turnover that could increase transaction costs and cause short-term capital gains to be realized.
The Fund may lose money due to fluctuations within the stock market which may be unrelated to individual issuers and could not have been predicted. The price of the securities which the Fund holds may change unpredictably and due to local, regional, international, or global events. In the case of a general market downturn, multiple asset classes, or the entire market, may be negatively affected for an extended and unknown amount of time.
Past performance is no guarantee of future results. Diversification cannot ensure a profit or protect against loss in a declining market. It is a strategy used to help mitigate risk
Distributed by Ultimus Fund Distributors, LLC. Member [FINRA](https://www.finra.org/#/)
Long Short Advisors is registered as an investment adviser with the Securities and Exchange Commission. There is no affiliation between Ultimus Fund Distributors, LLC, Long Short Advisors, and the other firms referenced on this website.