"The relationship between the volatility of a portfolio and asset mix is determined by the correlation between those assets," Nangle said. "If you thought that equity and bond correlations are going to rise, then the bendy blue line in that chart is going to become much more of a straight line."

That's exactly what happened the last time labor's borrowing power enjoyed a sustained increase, which was from the end of World War II to the dawn of the 1980s.

In other words, the old methods of diversification might not be very useful for portfolio managers in the future.

Nangle's view that we're on the cusp of a secular rising rate environment may have implications for other asset classes, too.

George Magnus, senior independent economic adviser to UBS, noted that the same demographics that would support increasing exposure to equities at the expense of bonds—the prospect of rising yields and inflation—are also for reduced returns on capital—a negative for corporate profits.

"Asset allocation would undergo a major change only if we can be confident there will be a rise in relative labor returns that also triggers higher inflation," said Magnus. "For that to happen, demand conditions have to become firmer and stay that way. Otherwise margins get squeezed, and both bonds and equities will falter."

With U.S. corporate profit margins close to all-time highs, downward pressure from structural forces amplifying any cyclical mean reversion would widely be considered a negative for equities, and it's not clear that the typical beneficiaries of rising inflation would be poised to benefit from such a development, either.

"Margins are high, and higher worker share of income would compress them, making current valuations less attractive," said George Pearkes, analyst at Bespoke Investment Group. "Commodities have been a traditional rising inflation hedge, but as we've seen, currently the world is already vastly oversupplied, and holding a commodities position with curves in steep contango is a very expensive proposition."

So what's the new hedge portfolio managers should be looking at?

"Cash is a really horrible asset because it makes you look lazy, really, to take someone's money and not do anything with it and charge a fee for it," said Nangle. "If you want to control the volatility of a portfolio, you need to be using shorter-dated assets in investment-grade credit and Treasuries."