AGG now rises on only 40% of S&P 500 down days, breaking the 60/40 safety net
As seen on the 24/7 Wall St. homepage on September 23, 2026.
If the core bond sleeve now rises on only 40% of S&P 500 down days, the classic 60/40 cushion is not doing the job investors are paying it for.
Hard to blame investors either given AGG hasn't kept up with inflation AND cannot be trusted to hedge stocks as it is now less likely than in the past to post a gain on days when the S&P 500 falls. It used to go up 90% of time SPY down. Now it's 40%. Major development. https://t.co/FUPYZYiZLX
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The iShares Core U.S. Aggregate Bond ETF, known as AGG, was long considered the reliable shock absorber inside a balanced portfolio. The expectation was simple: when stocks fell, bonds would rise, cushioning the blow. That relationship has eroded to a degree that Bloomberg Intelligence ETF analyst Eric Balchunas calls a major development.
Balchunas points out that AGG used to gain on roughly 90% of the days when the S&P 500 ETF declined. That figure has now dropped to 40%, meaning bonds are providing no offset on the majority of stock-market down days. For investors relying on a classic 60/40 allocation, that shift fundamentally changes what the bond sleeve is actually doing in a downturn.
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The problem is compounded by AGG's inflation record. Balchunas notes the fund has also failed to keep pace with inflation over time, eroding real purchasing power for investors holding it as a conservative anchor alongside its unreliability as a hedge against equity losses.
For anyone still holding a large core bond allocation, the position now fails on both counts that justified owning it: protection against stock declines and preservation of real value. Investors watching flows out of broad bond funds have the context they need when weighing whether the trend has further to run.