The low equity-government bond correlation seen since the turn of the century has formed the bedrock of the 60/40 multi-asset portfolio model. However, the correlation has grown increasingly positive in recent times – FTSE Russell analysis shows the correlation coefficient between the FTSE Global All-World equity index and the FTSE World Government Bond Index reached a 10-year peak of 0.86 at the end of March, while the mean coefficient for the decade since 2013 stands at 0.26. So what does this upwards trend mean for multi-asset portfolios? Generally speaking, the stock-bond correlation turns more positive during periods where markets are more concerned over inflation than growth. […]