Recent shifts in equity and income markets have some saying that the 60-40 portfolio mix has become a “dull artifact of the past,” but Vanguard argues that it’s performance during this “messy” year proves otherwise. This according to a recent article in Chief Investment Officer.

The firm’s mid-year investing review argues that the harsh effects of the pandemic on the economy only serve to support the sturdiness of the 60-40 mix of stocks and bonds, respectively.

“Many investors have gone bond heavy,” the article says, citing data from the Investment Company Institute showing a continuing long-term trend of redemptions from stock mutual funds and inflow of dollars to bond funds. The article reports, however, that a Bank of America Global Research note from last year stated, “The relationship between asset classes has changed so much that many investors now buy equities not for future growth but for current income, and buy bonds to participate in price rallies.” But the article points out that in the early part of this year (before the March 23 bottom) stocks took a beating of over 30% (MSCI index data) while bonds dipped by only 0.1%. As a result, the 60-40 allocation would have shaved the total loss to 20%.

Vanguard argues that the 60-40 mix should hold up going forward due to ultra-low rates, since bond price appreciation has “little runway left. If bond yields can’t go much lower, then their prices also can’t go much higher. The firm adds, “But bonds still can fulfill their mission as a balancing influence for ever-volatile equity.”

The article concludes with a comment from Vanguard senior economist Andrew Patterson: “The Fed expects to keep yields low till 2022. Bonds offset lows and temper highs,” of stocks.