The 60/40 Portfolio is Dead: BlackRock’s 50/30/20 Playbook and the ETFs to Own Now

BlackRock CEO Larry Fink has declared war on the investment world’s most venerable strategy: the 60/40 portfolio. In his 2025 annual letter, Fink called the classic split between stocks and bonds “effectively dead,” urging investors to pivot to a new model—50/30/20—that allocates 50% to equities, 30% to bonds, and 20% to private market assets like real estate, infrastructure, and private credit. The move is a stark acknowledgment of the evolving financial landscape, where bonds no longer provide the stability they once did and inflation demands fresh approaches.

The shift to 50/30/20 isn’t merely a tweak—it’s a seismic rethinking of risk and return. Fink argues that private markets, which have long been the domain of institutional investors, are now essential for retail investors seeking inflation protection and higher returns. Yet, with high minimums and illiquidity barriers, Fink suggests using exchange-traded funds (ETFs) as proxies to access these assets. Here’s how the strategy breaks down—and what ETFs to consider.

The New Allocations: 50/30/20 Explained

The traditional 60/40 portfolio, which allocated 60% to stocks and 40% to bonds, has underperformed in recent years as bonds lost their diversification magic. Yields have stagnated, and correlations with equities have risen, leaving portfolios vulnerable to market swings. Fink’s solution: slash bond exposure to 30%, and direct 20% toward private-like assets.

The 20% allocation to private markets is the linchpin. Fink cites historical data showing that infrastructure investments, for example, reduced portfolio volatility while boosting returns. Utilities and real estate—sectors tied to inflation-protected revenues—are key targets. For individual investors, ETFs offer a liquid, low-cost way to mimic this exposure.

ETFs to Own: The 20% Allocation

While Fink’s vision leans heavily on private assets, he acknowledges that retail investors must use ETFs to gain access. Here are the top picks:

1. Vanguard Real Estate Index ETF (VNQ): Tracks publicly traded REITs, offering broad exposure to commercial and residential real estate. With an expense ratio of 0.13%, it’s a low-cost entry point.
   

2. SPDR S&P Global Infrastructure ETF (GII): Invests in global infrastructure firms, including toll roads, utilities, and energy companies. Its 0.40% expense ratio reflects its broader scope but may deter cost-sensitive investors.
   

3. Vanguard Utilities ETF (VPU): Focuses on regulated utilities, which provide steady income but lack the global diversification of GII. Its 0.09% expense ratio makes it a budget-friendly option.
   

The Remaining 80%: Stocks and Bonds

Even as Fink downplays bonds, he doesn’t dismiss them entirely. The 30% bond allocation should prioritize shorter durations to avoid interest rate risk. For equities, broad market exposure remains critical:

• Vanguard S&P 500 ETF (VOO): Tracks the U.S. market’s blue-chip index, with an expense ratio of 0.03%.

• Vanguard Short-Term Corporate Bond ETF (VCSH): Focuses on corporate debt with maturities under three years, balancing yield and liquidity.

Why This Shift Makes Sense—and the Risks Ahead

Fink’s rationale is compelling. Bonds’ inability to hedge equity risk in high-inflation environments has been glaring: in 2023, the correlation between bonds and stocks hit a 40-year high, undermining diversification. Meanwhile, infrastructure and real estate have historically outperformed in inflationary periods. A study by BlackRock found that adding 20% infrastructure to a 60/40 portfolio reduced volatility by 1.2% while boosting returns by 0.8% annually.

But critics caution against overreach. Morningstar’s Amy Arnott warns that private markets’ lack of transparency and liquidity risks make a 20% allocation aggressive. She suggests a 6% allocation to align with global private market values. Others note BlackRock’s vested interest: the firm’s acquisitions of private asset managers like Global Infrastructure Partners may bias its recommendations.

Practical Steps for Investors

1. Start Small: Allocate 5-10% to private-market proxies like VNQ or GII before scaling up.
2. Use Target Date Funds: Fink advocates integrating private assets into retirement vehicles, which can automate the process.
3. Avoid Overcommitment: Private funds often require minimums of $50,000+, so stick to ETFs unless you’re an accredited investor.

Conclusion: A New Era, but Not Without Hurdles

Fink’s 50/30/20 framework isn’t just a rebalancing—it’s a call to arms for investors to adapt to a post-bond world. The data supports his thesis: pensions using private assets have outperformed 401(k) plans by 0.5% annually, a gap that compounds to millions over a lifetime. Yet, the path is fraught with trade-offs. Retail investors must weigh the cost (e.g., GII’s 0.40% fee) and illiquidity risks against the potential rewards.

As Fink himself notes, “asset allocation is more art than science.” But with inflation unlikely to retreat and bonds struggling to deliver, the 50/30/20 model offers a pragmatic compromise. For now, the question isn’t whether to abandon the 60/40—but how quickly to embrace its successor.