Bank of America predicts a decade of lackluster returns for the classic 60/40 investment portfolio, forecasting a 0.1% loss over the next 10 years. To counter this, they suggest six alternative trades, including small- and mid-cap value stocks and high-quality US stocks.

The bank expects gold to rally to $4,538 an ounce next year, citing factors like central bank demand and growing fiscal deficits. They also recommend commodities as a strong investment for 2026, alongside stocks aligned with key market themes, such as AI and industrial renaissance ETFs.

Quality stocks have been standout performers in recent years, outperforming other stock categories. Bank of America also highlights high yield bonds as a promising credit opportunity, with lower default rates compared to other credit types. Additionally, they recommend emerging market debt and dividend stocks for income-seeking investors.

Bank of America’s Research Investment Committee warns of potential underperformance for the classic 60/40 portfolio due to three years of strong stock market growth. They suggest diversifying with “satellite” trades in underappreciated sectors and regions. Additionally, they highlight the potential of high-yield bonds and emerging market investments for better returns.

Read more at Yahoo Finance: Bank of America flags its top 6 investing ideas as it sees the 60/40 portfolio heading for a dismal decade