The Death of the 60/40 Portfolio: How Active ETFs and Crypto Are Rewriting the Rules of Investing

Lead: Legendary investor Ric Edelman dropped a bombshell on CNBC’s ETF Edge: “The 60/40 portfolio is dead.” As market volatility reshapes investing, Bob Pisani’s recent deep dives into crypto ETFs, active strategies, and financial literacy reveal a seismic shift in how investors must navigate the new era.

The 60/40 Portfolio is No More

Ric Edelman, founder of the Digital Asset Council of Financial Professionals, told Pisani that the traditional 60% stocks/40% bonds mix is obsolete. Why? Bonds, once the “ballast” of portfolios, have become unstable as Treasury yields swing wildly. In 2023, the Bloomberg Aggregate Bond Index fell 7.5%—its worst year since 1980. Meanwhile, stocks like Tesla (TSLA) and Nvidia (NVDA) have become volatile single-stock ETFs, attracting retail traders but risking ruin for the unprepared.

Edelman’s solution? “Investors need to embrace active management and long-term strategies.” He slammed the “financial literacy crisis,” noting that most Americans lack basic knowledge of compound interest or diversification.

Active ETFs: The New Frontier

Pisani’s April 29 episode with JPMorgan’s Jon Maier highlighted a stark reality: active ETFs are exploding. Over 2,000 now exist globally, and 1,000 more could launch in 2025. JPMorgan’s JEPI (Equity Premium Income ETF) and JPST (Ultra-Short Income ETF) exemplify this shift.

• JEPI uses options strategies to boost income, falling just 3% in April despite market swings. Its top holdings—Mastercard (MA), Visa (V), and Progressive (PGR)—offer stability.
• JPST, meanwhile, focuses on ultra-short-term bonds, attracting investors fleeing long-term debt.

Maier warned, however: “Active ETFs aren’t a magic bullet. You need to vet managers and understand fees.”

Crypto ETFs: A New Wild West?

Edelman also tackled crypto, calling it a “must-consider” for long-term portfolios—if approached cautiously. New crypto ETFs, such as the ProShares Bitcoin Strategy ETF (BITO), now offer institutional-grade access to digital assets. Yet risks abound: BITO fell 18% in 2024 as regulatory uncertainty loomed.

“Crypto isn’t for day traders,” Edelman stressed. “It’s a 10- to 20-year play. Keep it under 5% of your portfolio.”

The Financial Literacy Crisis

Edelman’s most urgent warning? Schools and Wall Street have failed to teach basic investing principles. “A generation of Americans is being set up to lose,” he said, citing a 2024 FINRA study showing 60% of adults can’t pass a basic financial literacy test.

His fix? Mandate financial education in schools and push for transparency in ETF fees. “If you don’t understand an ETF’s strategy, don’t buy it,” he advised.

Conclusion: Adapt or Perish

The writing is on the wall: passive 60/40 portfolios won’t cut it anymore. Investors must embrace active ETFs like JPMorgan’s JPST (for ballast) and JEPI (for income), while allocating tiny slices to crypto via ETFs like BITO. But the biggest takeaway? Educate yourself.

As Pisani put it, quoting Vanguard’s John Bogle: “Don’t do something… stand there.” Stay invested, avoid panic trades, and prioritize learning. In 2025, the only way to win is to evolve.

Actionable Takeaway:
- Allocate 1–2% of your portfolio to crypto via an ETF like BITO.
- Use JPST for bond exposure, not long-term Treasuries.
- Audit your ETFs: Ensure you understand their strategies and fees.

The market is changing. Are you?