Summary

• With 10-year Treasury yields near 4.5% and real yields above 2%, bonds are starting to regain their role as effective recession hedges, strengthening the case for capital-efficient portfolios like the WisdomTree U.S. Efficient Core Fund.
• If stock-bond diversification improves, a 90/60-style allocation may once again offer equity-like return potential with better risk efficiency than a traditional 100% equity portfolio.
• Equities remain the long-term growth engine, but higher bond yields and a healthier yield curve revive the case for replacing part of an equity allocation with a diversified stock-and-bond strategy.

By Andrew Okrongly, CFA

Current Market Regime Revives an Original Case for Capital Efficiency

When we launched the WisdomTree U.S. Efficient Core Fund (NTSX) in 2018, the case was straightforward: a diversified stock/bond portfolio can be