How to Balance Your Portfolio: Chief Investment Officer at BNY

Forget 60/40. An investment manager explained how to divide your portfolio to give you exposure to private markets, based on your risk appetite.

Sinead Colton Grant, chief investment officer at BNY’s wealth division, said the traditional strategy of splitting your portfolio 60% into stocks and 40% into bonds no longer produces the same returns.

“What a 60/40 portfolio would have given you in the late 90s in terms of exposure to the global economy as a whole, it gives you something much smaller today,” she said.

“If you look at the changes in market structure over the last 20 years, they have brought us to a point where to have full exposure to the economy you need to be exposed to private assets,” she added.

She said the number of public companies in the United States has declined significantly over the past 30 years, amid increased regulation and growth in private credit since the financial crisis. The United States had about 8,000 public companies in 1996, compared to about 4,000 in 2024, according to the World Bank.

“Some of our clients will say, ‘I just want the government contracts,’ and that’s fine, but if a client comes to us and says, ‘What do you really recommend?’ We include private markets,” Colton Grant said.

An investor can gain exposure to private markets by accessing private equity, for example through a mutual fund or ETF, or by investing in venture capital, for example.

Golton Grant said an investor with a moderate risk appetite should consider investing 50% in stocks, 30% in bonds and 18-20% in alternative investments.

“For us, the alternatives are private markets and hedge funds,” added Colton Grant.

For a more aggressive strategy, we should devote “a little more” to alternatives, she recommended.

But the less risk you want to take, the more you need to reduce that exposure, she said.

For the moderate-risk portfolio, hedge funds would account for about 3 to 5 percent, she said. Of the remaining 15%, 75% would be invested in private equity and venture capital, and the remaining 25% would be split between private credit and real estate, Colton Grant said.