There seems to be almost nowhere for investors to hide this year. Stocks are always volatile and bonds haven’t performed better in years now. U.S. investment-grade bonds have plummeted in 2022. The iShares Core U.S. Synthetic Bond ETF — which tracks the Bloomberg U.S. Composite Bonds Index — has fallen nearly 8% since the start of the year. , although the bond market seems to have calmed down a bit recently. Historically, when stocks depreciated, bonds rose in value. That negative correlation turned positive during the pandemic, largely because central banks cut interest rates to stimulate the economy. But analysts have recently been bullish on earnings investing as yields begin to rise again, with Goldman Sachs saying in an August report that the strategy is set for a comeback. Here are a few ways experts recommend investors can position their portfolios to diversify and protect against market volatility and seek higher yields on inflation. output continued to increase. 60/40 Portfolio Poor performance in stocks and bonds, coupled with high inflation, has led some analysts to announce the death of the traditional 60/40 portfolio – consisting of 60% stocks and 40% bonds. Inflation is usually bad news for bonds. But some banking strategists have recently said that strategy will still work. Morgan Stanley says that portfolio can still return more than 6% annually — and diversification continues to provide investors with protection from volatile stocks. Wells Fargo in an August 2 note said that the strategy is “well alive”. On historical averages, the bank said, negative operating results are likely to be followed by double-digit positive profits over the next three years. Wells Fargo analysts wrote: “During the recovery period following negative 60/40 calendar years, stocks outperformed bonds by a substantial margin, averaging 18, 2% vs 4.5%. “Finally, after the recession in 2008, the 60/40 portfolio through the end of 2021 has had positive returns in 12 of the past 13 years with double-digit returns in eight of them.” The average yield on the Bloomberg US Composite Bond Index has also increased from about 1.5% to 3.5% since mid-2021 – the fastest one-year gain since 1994, Wells Fargo said. A look at high-quality investment bonds In June, global credit suffered its steepest decline since the pandemic, and the first half of the year was the worst on record for both excess returns and total returns. profits, according to Wells Fargo Securities. But if investors are selective enough, they can still find pockets of relative safety in some bonds, according to analysts. Sarang Kulkarni, portfolio manager at Vanguard, told CNBC’s “Squawk Box Europe” in late July that high-quality, long-term bonds would be the best investment idea. “From a valuation perspective, they’ve adjusted quite a bit… It’s not just treasuries, it’s not just government bonds,” he said, adding that high-quality bonds have a “defensive character.” against inflation. Here are some bond funds that Morningstar, in a late July report, said have managed to beat their other mutual funds, as they are less sensitive to interest rates. Bond prices have an inverse relationship with interest rates. US-based Vanguard Short-term Inflation Protected Stock Index Fund, Corporate Bond Fund (UK) M&G Corporate Bond Fund M&G Strategic Corporate Bond Fund Review thematic Investors may consider allocating 10% to 20% of their portfolio to thematic fund, which operates on secular growth themes and therefore has “an immense capacity to enhance portfolio results,” according to Morningstar. The company says such funds have become popular recently and focus on topics around technological innovation, consumer habits, among other areas. The equally weighted thematic index “always generates better returns”, with a compound annual growth rate of 7.48% compared to 6.28% for the Morningstar Global Markets Index. “We believe that theme investing offers an attractive alternative for investors who don’t want to be restricted to regional and regional funds. We think that if done properly, Exposure to thematic investments could position investors for blue chips in the future,” Morningstar said in a recent report. Infrastructure Investment When the rise in consumer prices shows no sign of abating, infrastructure is a good investment because of its “ability to act as an inflation hedge in investment portfolios.” “Infrastructure can often adjust to an inflationary environment because it is largely preprogrammed in the way that it builds inflation into regulations and contracts,” it said. The company also points out that infrastructure income is underpinned by long-term contracts, ensuring a stable revenue stream over the long term.