The firm said ESG strategies are too focused on divestment instead of investment in renewables and low carbon.
The 60/40 strategy suffered last year because bonds and stocks fell in tandem as central banks raised interest rates.
Gains in financial shares cautiously lifted global stocks at the start of the week.
The Fed sees rates higher for longer, but markets see easing in second-half 2023. Someone has to be right.
The firm recommends being underweight on government bonds in favor of inflation-linked debt and investment-grade credit next year.
Stocks and bonds are providing the best entry points since 2010 for long-term investors, firm strategists say.
Foreigners have snapped up dollar-denominated assets for higher yields and safety.
The fund's managers see increased droughts and floods as a threat to the developed world's water supply.
Over five years, ESG gained 73%, while fossil-fuel produces added 57%.
There's a void in energy markets that's now being filled by the dirtiest fossil fuel.
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