Morgan Stanley CIO favors 60/20/20 portfolio strategy with gold as inflation hedge

A 60/40 portfolio, which typically has 60% of its holdings in stocks and the remaining 40% in fixed income, counts on moves in the two asset classes to offset one another, with stocks strengthening amid economic optimism and bonds rising during turbulent times.
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Wilson, however, favors a 60% allocation to equities and 20% each to fixed income and gold . Within bond markets, the prominent Wall Street bear prefers shorter-duration Treasuries of five years over the 10-year notes to capture rolling returns along the yield curve.
The strength of a dual hedge lies in the contrast: both hedge inflation, but equities are growth-linked risk-on bets, while gold rallies as a safe-haven when real rates fall in downturns.
Spot gold prices, meanwhile, surged past $3,700 an ounce to a record high on Tuesday, buoyed by mounting expectations of a rate cut by the Federal Reserve this week.