A 60/40 portfolio divides investments between stocks and bonds: 60 percent and 40 percent respectively. It is a useful starting example because its rule is easy to state and its assumptions are easy to inspect. It is not a recommended allocation for every investor.
Define the rule
The illustrative prompt below uses SPY and TLT and asks for monthly rebalancing. Specify when the model observes prices, when a rebalance can execute, and whether costs are included. A month-end decision and a next-session fill are different dates.
Between rebalances, market movements can change the weights. The model's Target allocation is its rebalance decision; Current is the modeled book at its latest data date, not a connected brokerage account.
Inspect a public example
Open the public model to inspect its current run, inputs, available history and allocation. This card changes as the model updates. Read the displayed dates and assumptions before quoting its metrics. The model owner's code is private; a public result does not grant source access.
The portfolio walkthrough carries a stock-and-bond example from asset selection through inspection and comparison. You can use the web app without connecting an agent.
Compare one change
Keep the window and other inputs fixed while testing one choice:
- Weights: change the stock allocation and examine the resulting exposure.
- Schedule: compare monthly, quarterly and annual rebalancing.
- Assets: inspect a different bond fund's duration, structure and available history before substituting it.
- Additional rules: test a trend filter as a separate hypothesis.
A permanent-portfolio or all-weather-style allocation adds other exposures and rules. Treat it as a different model; a label alone does not specify the funds or implementation.
Review limitations and begin
Stocks and bonds can fall together. Long-duration bonds can be sensitive to changes in interest rates. Diversification does not eliminate losses, and a historical comparison cannot establish future performance.
Inspect missing coverage and any synthetic backfills. Do not assume commissions, spreads, taxes or market impact are included. Keep the run IDs and inputs when comparing results; see metrics explained.
The prompt is an illustrative starting point. Review the generated implementation before relying on a result. ENSEMBLE is research software; backtests are hypothetical and past performance does not guarantee future results.
Frequently asked questions
- What does 60/40 mean?
- It means allocating 60 percent to stocks and 40 percent to bonds. The selected assets, rebalancing rules and execution assumptions still need to be specified.
- How often should I rebalance in a backtest?
- Choose a rule before reviewing results, then compare alternatives over the same dates. Monthly, quarterly and annual schedules are testable choices, not promises of better returns.
- Does the bond sleeve prevent losses?
- No. Both sleeves can lose value together. The choice of bond fund changes interest-rate and other exposures; inspect its metadata and history.
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