BlackRock (NYSE: BLK) is one of the largest asset managers on Earth, and its CEO, Larry Fink, gets a lot of attention on Wall Street. So, when he suggests that investors need to update the 60/40 portfolio, it is probably worth considering. Here's what Fink's updated portfolio might look like for you.

What is a 60/40 portfolio, and why do it?

The 60/40 portfolio is actually pretty simple. It just means that you put 60% of your assets into stocks and the remaining 40% into bonds. You can set this portfolio up with just two ETFs and two trades. Updating it annually will only require two trades. In essence, you are creating your own personal balanced fund.

Image source: Getty Images.

To give a more concrete example, you could buy Vanguard S&P 500 ETF (VOO 0.12%) and Vanguard Short Term Corporate Bond ETF (NASDAQ: VCSH). The stocks provide long-term growth, while the short-term bonds provide an offset to the volatility of stocks. It might not be the ideal mix, per se, but over time, a 60/40 portfolio has performed admirably for investors. The truth is, you probably wouldn't be making a mistake to stick with the old Wall Street advice on this one.

Times change, and Larry Fink thinks 60/40 needs to be fine-tuned

That said, the rule of thumb 60/40 portfolio dates back decades, and Wall Street has changed dramatically over the years. There are entirely new industries and asset classes that didn't exist when 60/40 was adopted as a rough standard. Larry Fink believes private equity, real estate, and infrastructure are all differentiated enough to create a new basket in addition to stocks and bonds. Thus, he has updated his advice to 50/30/20, with the new 20 group consisting of private equity, real estate, and infrastructure.

It isn't surprising that the CEO of a large asset management firm would suggest that things his company invests in are the hot new things to buy. So, you have to take his update with a grain of salt. For most small investors, it is difficult to get into the private equity space. However, you can easily add real estate and infrastructure to your portfolio with exchange-traded funds (ETFs) if you want to follow Fink's advice.

Some good options include Vanguard Real Estate Index ETF (VNQ 1.44%) and SPDR S&P Global Infrastructure ETF (NYSEMKT: GII). You could sub in Vanguard Utilities ETF (VPU 0.99%) for infrastructure if you wanted, but it would be centered on just utilities, which is only a subset of the infrastructure space. As for the Vanguard Real Estate Index ETF, it owns publicly traded REITs, as its name implies. Both of the Vanguard options have very low expense ratios, with the Vanguard Real Estate Index ETF at 0.13% and Vanguard Utilities ETF at 0.09%.

VPU Total Return Price data by YCharts.

SPDR S&P Global Infrastructure ETF's expenses are a bit higher at 0.4%. That said, it has a globally diversified portfolio, which inherently leads to higher costs. It owns 75 of the largest infrastructure companies on Earth, with about 40% of assets in industrial stocks, 40% in utilities, and the rest in energy companies. Of the three, it is the most diversified option if you only want to buy a single ETF.

Should you follow Larry Fink's 50/30/20 advice?

The change from 60/40 to 50/30/20 actually isn't all that radical if you use publicly traded companies bought via an ETF to shift your mix. You are just pulling a little bit of funds from the bond side, and a little bit from the stock side, to carve out a spot for asset categories that may move differently from either stocks or bonds. In the end, asset allocation is more art than science anyway, so a few percent here or there isn't going to upend your portfolio.

That said, you really don't need to do this if you prefer to keep things simple. But it probably won't hurt, either. And if you only add one or two ETFs to your investment, life won't really get much more complicated. You could easily allot 20% of your assets to the Vanguard Real Estate ETF or 20% to the SPDR S&P Global Infrastructure ETF. Since these ETFs are filled with public companies, you aren't taking on risks outside of what you have already accepted by owning stocks.