Rethinking the 60/40 portfolio in the U.S. as gold becomes a ‘core allocation’
NEW YORK (November 19) As macro conditions shift, investors are beginning to view gold as a core allocation for structural resilience, while Europe’s growing allocation to gold – now equal to sovereign bonds – is accelerating the adoption of real assets like ETFs in the United States, according to a new analysis from WisdomTree.
“There's a quiet revolution taking shape in portfolios,” wrote WisdomTree Global Head of Research Christopher Gannatti and Europe Director of Research Nitesh Shah. “For decades, the 60/40 mix—60% equities, 40% bonds—was the shorthand for prudence, diversification and balance. But the regime that made that formula work—low inflation, stable growth and negative stock-bond return correlations—appears to have shifted.”
The researchers said that after 2022, investors are questioning how well bonds counteract equity risk. “In this new macro geometry, investors are re-examining what the "40" should really be,” they said. “Morgan Stanley's latest Global Insights calls gold "an attractive hedge against fiscal largesse and geopolitics," noting its 50% rally year-to-date and near-zero equity correlation.”
“Gold is not just a store of value; it's a statement about the limits of paper promises.”
Gannatti and Shah said that in today’s market, gold allocation is about function rather than fear. “Exchange-traded fund (ETF) inflows of more than $10 billion in September alone show that institutional and retail investors alike are beginning to re-engineer portfolios for an era of structural deficits and active fiscal policy,” they wrote. “The asset's behavior has evolved: what was once a rate-sensitive trade has become a fiscal-risk hedge. Correlations with Treasury yields have flipped from deeply negative to positive, implying that gold now rises with, not against, higher long-term rates when those rates reflect sovereign stress. That's an inversion of an old mental model.”
“Investors aren't running from volatility; they're buying the only liquid asset that sits outside the liabilities of any government or central bank,” they emphasized.
And this represents a profound shift. “Instead of treating gold as an accessory to a portfolio, some strategists now treat it as a core sleeve of real assets—a 20% reallocation from the bond bucket that acknowledges diversification is no longer about opposites, but about orthogonality,” the analysts said. “For allocators, this isn't nostalgia for the gold standard; it's recognition that the architecture of portfolio resilience is changing. The new 60/20/20 mindset—equities, fixed income and real assets—may prove less a radical break than a quiet return to first principles: holding something that no one else owes you.”
Gannatti and Shah said this evolution is well underway in Europe. “In WisdomTree's 2025 Investor Survey of 802 European and U.K. participants, gold ranked as the top safe-haven asset, with 41% of respondents identifying it as their preferred store of value, well ahead of Bitcoin and the U.S. dollar,” they noted. “Perhaps more telling, average portfolio allocations to gold now stand at 5.7%, equal to holdings in developed-market sovereign debt. That balance suggests gold is no longer viewed as a fringe diversifier but as a mainstream, fixed component of institutional portfolios.”
“In a globalized capital system, these regional shifts don't stay regional,” they added. “European reallocations toward real assets inevitably influence global flows and price discovery, amplifying gold's liquidity and institutional relevance across markets.”
And the assets investors are choosing to access gold are also telling. “The survey shows nearly 40% favor exchange-traded products (ETPs), far surpassing preferences for physical bullion, futures or mining equities,” the analysts wrote. “The logic is pragmatic: ETPs deliver transparency, low cost and scalability that fit the modern portfolio construction toolkit. For U.S. investors, the European experience is an instructive case study. It suggests that the conversation about gold's role has moved beyond the ‘why’ to the ‘how.’”
“As more allocators integrate gold as a core sleeve within real assets rather than a tactical overlay, the result may be a gradual convergence between U.S. and European portfolio design, one in which hard assets are recognized not as outliers, but as foundational pillars of modern diversification.”
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