Larry Fink is throwing the investment world a curveball—or maybe just a long-overdue update.
In his annual letter to BlackRock shareholders, the firm's CEO suggests it might be time to retire the old-school 60/40 portfolio. That's the classic mix of 60% stocks and 40% bonds that's guided generations of investors since Nobel Prize-winning economists Harry Markowitz and Bill Sharpe laid the groundwork with Modern Portfolio Theory. But according to Fink, what once passed as "true diversification" might no longer cut it.
"The future standard portfolio may look more like 50/30/20," Fink writes, pointing to a mix of 50% stocks, 30% bonds, and 20% private market assets—such as infrastructure, real estate, and private credit.
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Why the shift? Because the world has changed.
Markets have evolved. Inflation won't stay silent. And bonds? Not the safe haven they once were. Fink argues that while private assets come with their own risks, they offer benefits that public markets can't always match—namely inflation protection, stability, and historically higher returns. "The appeal is clear," he wrote.
The case for infrastructure is especially compelling. Toll roads, utilities, and other revenue-generating infrastructure assets typically adjust with inflation. They're also less volatile than traditional stocks and bonds—something today's nervous investors won't overlook. As the chart in Fink's letter shows, portfolios that included infrastructure not only had better returns but also lower volatility.
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Take a traditional 60/40 model portfolio, for example. With the addition of infrastructure, annualized returns moved higher, while volatility dropped. The same thing happened with pension portfolios. That's the bump—more return, less stress.
But there's a catch.
As Fink points out, the industry isn't built for a 50/30/20 world. Most asset managers still live in the 50/30 public market zone, while private market firms control the 20% piece. For individual investors, crossing into that private territory is tough. Even those with enough money to qualify might only have enough to invest in one fund—putting a fifth of their portfolio in a single vehicle. And that's not real diversification.
Fink believes BlackRock can fix that.
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Just as it bridged the divide between index and active investing back in 2009 with its acquisition of Barclays Global Investors – the firm behind iShares ETFs – BlackRock is now working to unify public and private markets. In October, it took a major step in that direction by acquiring Global Infrastructure Partners. Two more acquisitions are expected to follow.
The 2009 move wasn't just about betting on ETFs. It was about giving investors the flexibility to combine strategies—to blend low-cost index funds with actively managed products. "Every investing decision is active," Fink noted, even choosing an index. Since then, BlackRock says it's helped investors save over $642 million in fees while giving them more control.
Now, Fink sees the same chance to shake up investing all over again. His message? The old playbook's getting stale—it's time for an upgrade.
Whether the 50/30/20 mix becomes the new gold standard remains to be seen—but Fink's not waiting to find out. He's already building the bridge.
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