Although portfolio diversification in the form of a 60/40 stock and bond split has long been considered the standard given that “bonds typically act as a shock absorber to drops in equities,” a recent article in Barron’ssuggests that things might be changing.

The article reports that historically low bond yields along with the Fed’s intention to push inflation above 2%, bonds are facing negative real returns. Citing projections from J.P. Morgan strategist Jan Loeys, it adds that the outlook for equity returns “are even more imponderable,” with a 3.5% annual return for a 60/40 portfolio over the next ten years.

Alternative investments—“hybrids” that include a mix of high-yield bonds, convertibles, REITS, and utilities—might be something to consider, the article notes, adding that since 1987, an equally-weighted mix o these has returned 10% annually (versus 11% for the S&P 500).

Loeys’s simulations reflect that over the next 10 years “a mix of 20% traditional bonds, 40% hybrids, and 40$ stocks would provide an estimated yearly return of about 4%.”

The article concludes: “The message is that investors should hold fewer ‘safe’ bonds and similar allocations to these hybrids and equities in a conservative portfolio,” adding that Loeys’s estimates suggest “shifting further to 60% hybrids/40% stocks would provide a projected 5% return over the next decade, the same as an all-equity return, with much lower volatility by the end of the period.”