LPL Research Urges Diversification Beyond 60/40 Portfolio Framework

LPL Research recommends that investors diversify their holdings beyond the traditional 60/40 portfolio framework to navigate a fragmented macro regime. The firm cites high volatility and policy uncertainty as primary drivers for this shift, noting that several pressures impacted the first half of 2025.

These pressures include shifting U.S. administration policies, elevated equity valuations, and unresolved tariff negotiations. While the firm suggests that lower taxes and deregulation may offer some market support, it warns that mixed economic data and geopolitical tensions are complicating the decision-making process for the Federal Reserve System.

To enhance stability during periods of market whipsawing, the firm suggests adopting equity market-neutral strategies and utilizing nimble discretionary macro managers with broad geographic coverage. LPL Research also recommends maintaining a diversified book of managed futures sub-strategies to mitigate risk.