equitytobond

Equitytobond is a term used in finance to denote the equity-to-bond ratio of an investment portfolio. It describes the relative exposure to equities (stocks) versus fixed-income securities (bonds). The ratio is typically calculated as the market value of equities divided by the market value of bonds. For example, a portfolio with 60,000 in equities and 40,000 in bonds has an equitytobond of 1.5. Equivalently, this can be expressed as a 60/40 equity-to-bond allocation, or as percentages (60% equities, 40% bonds).

The metric serves as a simple proxy for risk tolerance and time horizon in asset allocation frameworks. Investors and advisers use the equitytobond ratio to set target allocations and guide rebalancing decisions. As markets move, the ratio shifts, and rebalancing restores the target mix by buying or selling assets to maintain the intended tilt.

However, equitytobond captures only two asset classes and ignores diversification within them, currency risk, inflation exposure, and correlations with other assets such as cash, real estate, or commodities. It also does not measure volatility, drawdown, or liquidity. Therefore it should be used alongside other metrics when evaluating risk and return prospects.

Related concepts include asset allocation, balanced funds, target-date funds, risk parity, and glide paths. In practice, advisers may use the equitytobond ratio alongside metrics such as standard deviation, maximum drawdown, and expected return to design portfolios aligned with investor goals.