Stocks/Bonds 40/60 To EUR Bond Hedged Portfolio: Rebalancing Strategy

Data Source: from August 1953 to May 2024
Consolidated Returns as of 31 May 2024

Managing the Stocks/Bonds 40/60 To EUR Bond Hedged Portfolio with a yearly rebalancing, you would have obtained a 6.98% compound annual return in the last 30 Years.

With a quarterly rebalancing, over the same period, the return would have been 6.93%.

How do returns and drawdowns change, implementing different rebalancing strategies?

Rebalancing Strategies

In order to keep risk under control, you should rebalance assets quotes from time to time, so to keep them at the original percentage of the asset allocation.

Rebalancing can be performed in several ways.

At fixed time intervals:
  • Yearly: Jan 1st
  • Half Yearly: Jan 1st, Jul 1st
  • Quarterly: Jan 1st, Apr 1st, Jul 1st, Oct 1st
When a component (at least one) diverges from its original weight beyond a certain threshold (e.g. 5% or 10%).

Portfolio Returns as of May 31, 2024

Implementing different rebalancing strategies, the Stocks/Bonds 40/60 To EUR Bond Hedged Portfolio guaranteed the following returns.

According to the available data source, we assume we built the portfolio on August 1953.

Portfolio returns are calculated in EUR, assuming:
  • No fees or capital gain taxes
  • the reinvestment of dividends, if existing
  • the adjustment for actual currency exchange rates (simulation derived from original US returns)
  • the currency hedging (simulation taking into account the interest rate differentials of the countries). It is also assumed that hedged instruments have an additional expense ratio of 0.25% (yearly), compared to the US original instrument.
STOCKS/BONDS 40/60 TO EUR BOND HEDGED PORTFOLIO RETURNS
Period: August 1953 - May 2024
Annualized Returns
Swipe left to see all data
Return (%) and number of rebalances as of May 31, 2024
Rebalancing Strategy 1Y 5Y 10Y 30Y MAX
(~71Y)
Yearly Rebalancing 9.52 (1) 5.54 (5) 5.96 (10) 6.98 (30) 7.96 (71)
Half Yearly Rebalancing 9.37 (2) 5.36 (10) 5.89 (20) 6.80 (60) 7.91 (141)
Quarterly Rebalancing 9.33 (4) 5.38 (20) 5.95 (40) 6.93 (120) 7.90 (283)
5% Tolerance per asset 9.66 (1) 5.47 (3) 6.00 (6) 6.97 (23) 7.90 (48)
10% Tolerance per asset 10.85 (1) 5.93 (2) 6.36 (4) 6.98 (7) 7.99 (16)

In order to have complete information about the portfolio, please refer to the Stocks/Bonds 40/60 To EUR Bond Hedged Portfolio: ETF allocation and returns page.

Performances as of May 31, 2024

Historical returns and stats of Stocks/Bonds 40/60 To EUR Bond Hedged Portfolio, after implementing different rebalancing strategies.

STOCKS/BONDS 40/60 TO EUR BOND HEDGED PORTFOLIO PERFORMANCES
Period: August 1953 - May 2024
Swipe left to see all data
Standard Deviation
Max Drawdown (%)
Rebalancing Strategy Return % Std Dev(%) Ret. / Std Dev MaxDD(%) Ret. / MaxDD
Yearly Rebalancing 7.96 (71) 7.62 1.05 -20.48 0.39
Half Yearly Rebalancing 7.91 (141) 7.54 1.05 -21.00 0.38
Quarterly Rebalancing 7.90 (283) 7.54 1.05 -21.54 0.37
5% Tolerance per asset 7.90 (48) 7.60 1.04 -21.76 0.36
10% Tolerance per asset 7.99 (16) 7.76 1.03 -20.65 0.39
(*) Since Aug 1953 (~71 yrs) | Annualized Returns (and number of rebalances)

Drawdowns as of May 31, 2024

Historical Drawdowns of Stocks/Bonds 40/60 To EUR Bond Hedged Portfolio, after implementing different rebalancing strategies.

STOCKS/BONDS 40/60 TO EUR BOND HEDGED PORTFOLIO DRAWDOWNS
Period: August 1953 - May 2024
Swipe left to see all data
Rebalancing
Tolerance per asset
Yearly Half Yearly Quarterly 5% 10%
-20.48
Jan 1973 - Jun 1975
-21.00
Jan 1973 - Jun 1975
-21.54
Jan 1973 - Nov 1975
-21.76
Jan 1973 - Dec 1975
-20.65
Jan 1973 - Jun 1975
-16.17
Sep 1987 - Jan 1989
-15.68
Jun 2007 - Dec 2009
-15.73
Jun 2007 - Dec 2009
-16.30
Jun 2007 - Jan 2010
-16.41
Jun 2007 - Feb 2010
-14.66
Jun 2007 - Dec 2009
-14.51
Jan 2022 - In progress
-14.35
Jan 2022 - In progress
-15.13
Sep 1987 - Sep 1988
-15.83
Sep 1987 - Jan 1989
-14.55
Jan 2022 - In progress
-14.48
Sep 1987 - Jul 1988
-14.20
Dec 1968 - Dec 1970
-14.35
Jan 2022 - In progress
-15.34
Dec 1968 - Dec 1970
-13.94
Dec 1968 - Dec 1970
-13.95
Dec 1968 - Nov 1970
-13.50
Sep 1987 - Jun 1988
-13.89
Dec 1968 - Nov 1970
-14.57
Jan 2022 - Mar 2024
5 Worst Drawdowns - Average
-15.96 -15.92 -15.86 -16.29 -16.56
10 Worst Drawdowns - Average
-12.66 -12.71 -12.59 -12.96 -13.41

For a deeper insight, please refer to the Stocks/Bonds 40/60 To EUR Bond Hedged Portfolio: ETF allocation and returns page.