60/40 Portfolio Benchmark: The Best Benchmark and How to Calculate It

The standard benchmark for a 60/40 portfolio is a blend of 60% S&P 500 and 40% Bloomberg US Aggregate Bond Index, rebalanced back to those weights on a set schedule. That blend exists because no single published index describes a portfolio holding both stocks and bonds. Measure a balanced portfolio against the S&P 500 alone and you are comparing it to something it deliberately is not, which produces a verdict about your asset allocation rather than about your decisions. The rest of this guide covers which indexes to use for each sleeve, how to calculate the blended return, and the rebalancing detail that quietly ruins most homemade benchmarks. It is educational and informational content, not investment advice.

What is the standard benchmark for a 60/40 portfolio?

A 60/40 benchmark is 60% of an equity index plus 40% of a bond index, weighted and rebalanced to match how the portfolio is actually run. In the United States the conventional pairing is the S&P 500 for the equity sleeve and the Bloomberg US Aggregate Bond Index, usually called the Agg, for the fixed income sleeve. The Agg measures the investment grade, US dollar denominated, fixed rate taxable bond market, which is the closest broad match to what a typical balanced portfolio holds in bonds.

That pairing is the default rather than the only answer. The right benchmark is the one that describes your holdings, so a few substitutions are common and legitimate:

Duration is the detail people skip. If your bond sleeve is short duration Treasuries and you benchmark it against the Agg, you have built a comparison that will read as underperformance in every falling rate environment and outperformance in every rising one, for reasons that have nothing to do with your judgment. Match the sleeve, then move on.

Why the S&P 500 is the wrong benchmark for a 60/40 portfolio

Comparing a balanced portfolio to the S&P 500 guarantees a wrong answer in both directions. In a strong equity year the portfolio trails, because 40% of it was never trying to keep up. In a bad equity year it wins, for the same reason. Neither result tells you anything about how well the portfolio was built.

2022 makes the point with real numbers. The S&P 500 returned -18.11% on a total return basis and the Bloomberg US Aggregate returned -13.01%, the worst year in the bond index's history. Blend those to a 60/40 benchmark and the arithmetic is:

A balanced portfolio that lost 15% in 2022 beat its benchmark by roughly a point. Measured against the S&P 500 it looks like it beat the market by three points, which flatters it. Measured against a pure bond index it looks like a disaster. Same portfolio, same year, three different stories, and only one of them is scored against something that resembles what was actually held.

2022 is also the clearest illustration of why the 40 is not a safety guarantee. Stocks and bonds fell together because inflation and the fastest Federal Reserve tightening cycle since the early 1980s hit both at once. The diversification argument for 60/40 rests on the two sleeves usually not moving in lockstep, and "usually" is doing real work in that sentence.

How do you calculate a 60/40 benchmark return?

Multiply each index return by its weight and add the results. For a period where the equity index returned 12% and the bond index returned 3%:

(0.60 x 12%) + (0.40 x 3%) = 7.2% + 1.2% = 8.4%

Three rules make that number trustworthy:

• Use total return index versions. A price return index leaves out dividends and coupons, which understates the benchmark by a meaningful margin every year and hands your portfolio a win it did not earn.
• Use identical start and end dates for every component. Comparing your portfolio's calendar year to a benchmark's trailing twelve months is a common and completely invalidating mistake.
• Decide the rebalancing schedule before you calculate anything. A benchmark's return depends on when it resets, and quarterly versus annual will give you different numbers over the same window.

The rebalancing trap that breaks homemade benchmarks

This is the detail that catches almost everyone. A blended benchmark must be rebalanced back to 60/40 on a stated schedule. If you set it up once and let it run, the equity sleeve grows through every bull market until the thing you call a 60/40 benchmark is behaving like 70/30 or worse.

At that point the benchmark starts beating your portfolio for the sole reason that it has quietly become more aggressive than your portfolio is. You will read that gap as underperformance and start questioning a strategy that is working exactly as designed. Pick quarterly or annual, write it down, and apply it consistently to the benchmark and the portfolio both. The mechanics and the tradeoffs are covered in more depth in our guide to portfolio rebalancing.

The same discipline applies to the portfolio side. If your actual holdings have drifted to 68/32 and you are still measuring against a rebalanced 60/40 blend, the comparison is again reporting drift rather than skill.

What is the average return on a 60/40 portfolio?

There is no single honest number, and the way that question usually gets answered is a trap. Every published average depends on the start date, the end date, which two indexes were used, whether returns are nominal or adjusted for inflation, and how often the blend was rebalanced. Change any one of those and the headline figure moves by percentage points. Long-run estimates over multi-decade windows generally land in the high single digits nominally, but quoting one of those as an expectation for your own next decade is exactly the mistake the benchmark discipline is meant to prevent.

The useful version of the question is narrower: what did a 60/40 blend return over the specific period I am judging my portfolio against? That has one right answer, you can calculate it from the two index returns, and it is the only comparison that means anything about your results.

Is a 60/40 portfolio still good?

The 60/40 debate reopens every time bonds have a bad year, and 2022 reopened it loudly. What actually changed is less dramatic than the headlines: the case for 60/40 was never that bonds can't fall, it was that they usually fall at different times and for different reasons than stocks. The 2022 correlation break was real and it was painful, and it did not repeal the underlying logic. Higher starting yields since then have also made the 40 a more productive sleeve than it was through the near-zero years.

The more interesting question for most self-directed investors is whether 60/40 describes what they actually hold. Very few portfolios are cleanly 60% S&P 500 and 40% Agg. Once there is international exposure, small caps, REITs or a crypto sleeve in there, the standard benchmark stops fitting and a custom blend is the only comparison that tells the truth. Assets with no traded price, a rental property or a stake in a private company, do not belong in the comparison at all and need their own valuation rather than an index.

Building the blend as a single trackable index

Most people build a 60/40 benchmark once in a spreadsheet, then never update it, because maintaining the weights and the rebalancing by hand every quarter is tedious enough that it stops happening by the second year. The alternative is to construct the blend as an index in its own right, so the benchmark becomes one line you can chart against your portfolio instead of a calculation you rebuild.

That is what Indexes does. You define the components and weights, set the rebalancing schedule, and backtest both the portfolio and the benchmark over identical dates so the drawdowns line up alongside the returns. It is analysis software: it never places a trade, connects to a brokerage or holds money, and every backtest is hypothetical historical performance that does not predict future results.

If your holdings are more complicated than 60/40, the broader method for picking and blending the right indexes is covered on our portfolio benchmark page, and the mechanics of weighting a basket in index construction.

The short version

• The default 60/40 benchmark is 60% S&P 500 plus 40% Bloomberg US Aggregate, rebalanced on a schedule.
• Calculate it by multiplying each index return by its weight and adding: a 12% equity year and a 3% bond year gives 8.4%.
• Use total return index versions and identical date ranges, or the number is wrong.
• Rebalance the benchmark, or it drifts more aggressive than your portfolio and manufactures a performance gap.
• If your portfolio is not really 60% US large caps and 40% broad US bonds, build the blend that matches what you hold instead.

Educational and informational only. Nothing here is investment advice, and past performance does not guarantee future results.