As an investor, my client's approach is moderate
and my client uses fixed income to diversify equity risk

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The hidden risk: Equity risk

Bonds may behave too much like stocks

Average portfolio allocation1

Portfolio allocation: Moderate diversify equities

90% of the portfolio risk in this example is equity risk. The portfolio could suffer unintended losses in a stock market sell-off.2

Based on the portfolios we’ve analyzed, a portfolio like this is typically comprised of 56% equities and 44% bonds, allocated as shown above.3

For illustrative purposes only.

Understanding this risk

  • Not all bonds are the same. Corporate and high yield bonds are typically affected by the same factors that drive equity markets.
  • Core bonds have provided a buffer from equity market volatility . Bonds that provide equity offset are underrepresented in these portfolios.

Help manage your hidden risks

Consider adding core and municipal bond funds that invest in high-quality bonds to help offset equity risk.

Let us help you build a better fixed income portfolio for your client.

Contact us



or use the Target Allocation 60/40 portfolio strategy to help manage your risk with an all-in-one strategy.

60/40 Target Allocation ETF Portfolio Strategy

This investment strategy seeks total return through exposure to a diversified portfolio of primarily equity, and to a lesser extent, Fixed Income asset classes with a target allocation of 60% equities and 40% fixed income. Target allocations can vary +/-5%. It invests exclusively in iShares Exchange Traded Funds which may pay fees and expenses to BlackRock that are in addition to the fees payable to BlackRock for managing the account. Selection of this strategy indicates a willingness to assume some risk of principal loss. More detailed information on this strategy is available upon request.

Allocations %
U.S. equity 47.0%
U.S. fixed income 31.0%
International equity 18.0%
International fixed income 4.0%

How is technology helping BlackRock manage risk?

Hear from Rick Rieder, BlackRock's Global Chief Investment Officer of Fixed Income, on how the team uses technology to better understand risks in the fixed income markets.

  • View transcript

    Q: How is technology helping BlackRock manage risk?

    The investment world has evolved to where markets have become more efficient in many ways. Social and other media more broadly creates an incredible flow of information. To regularly out-pick the market based on one specific piece of information is impossible. So what should you do? Research, research, research. And analyze. And then allocate your portfolio in a way that ensures you’ve got relative value decisions all around the world, all around the capital stack, and around different asset classes. Then do it over and over again.

    It’s a way of tilting the odds in your favor. By repeating that process a million times over, you’re creating a dynamic where you’re not just diversifying to reduce risk, but you’re diversifying in a way that you’ve got a lot of relative value calls that make sense. When you do it over and over, the odds are working for you on a regular basis.

Well positioned to identify risk

BlackRock is powered by Aladdin®, our powerful risk-analysis and portfolio management technology. Our Aladdin® risk technology platform oversees $17+ trillion in assets under management and is relied upon by 100+ institutions.

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