Diversification Is No Longer Guaranteed

Janus Henderson argues that the traditional 60/40 portfolio is becoming structurally less resilient as stock–bond correlations shift higher in a more inflationary and geopolitically fragmented world. 

• For most of the post-2000 era, investors benefited from negative stock–bond correlations, but historically these relationships have repeatedly reversed during higher-inflation regimes.
• As correlations rise, both equities and bonds increasingly respond to the same macro shocks, reducing the diversification benefits embedded in traditional portfolios.
• Janus Henderson argues liquid alternatives with low correlation profiles may partially restore portfolio efficiency, particularly when geopolitical and inflation risks dominate markets.

The report’s core message is subtle but important: diversification itself may no longer be a static assumption, but a variable shaped by the macro regime.