Stocks and Bonds Over the Last 19 Years

I have been looking for monthly total return history for bonds but haven’t had a lot of luck (unless I want to fork over some serious money). I asked Craig Israelsen and he was able to provide me with monthly bond returns going back to 1991. I’m still looking for monthly returns going back to 1926. If any of you can help me out, I would appreciate it.


I took the monthly total returns for the Barclays Aggregate Bond Index and combined them with the total returns for the S&P 500 Index and ran some numbers. I started with 100% in stocks and ran the numbers for the nineteen year period (1991-2009). Then, I re-ran the numbers, adjusting the allocations by 5% (you can see this in the following graphic). The results are here:

What I found interesting was the how adding bonds didn’t reduce the performance of the portfolio but did reduce the volatility. Granted, this is a very short-term look at returns. It was also a period in time that saw stocks get hammered in the early 2000’s and again in 2008. BUT…that’s the purpose of ASSET ALLOCATION!

From this study, it seems that the sweet spot was a portfolio of 85/15 stocks/bonds or 80/20 stocks/bonds. The ending values are nearly identical to the ending value of the 100% stock portfolio but weren’t nearly as volatile based on monthly standard deviation.

We’re not done looking at this. Tomorrow I’ll look at the same portfolio from a dollar-cost averaging point of view. The results are pretty interesting.

4 thoughts on “Stocks and Bonds Over the Last 19 Years”

  1. Interesting, I always felt bad (yes, even through the recent bear market) about putting 8% into bonds due to the low returns, but this is reassuring. Thanks. Looking forward to tomorrow’s post.

  2. Nice investigation, and I think it matches common wisdon: that a diversified portfolio including bonds doesn’t hurt returns that much, but reduces volatility (some equate with risk) quite a bit.

    The Vanguard Target Retirement 2045 fund that I primarily use, has a 90/10 mix.

    Across all my investments, I’m holding a 65/35 mix (I like the PIGIX bond fund that I got heavy into last year — love that dividend).

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