High Yield Bonds Income Portfolio: Rebalancing Strategy

Data Source: from January 1985 to September 2024
Consolidated Returns as of 30 September 2024

Managing the High Yield Bonds Income Portfolio with a yearly rebalancing, you would have obtained a 7.08% compound annual return in the last 30 Years.

With a quarterly rebalancing, over the same period, the return would have been 6.90%.

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 Sep 30, 2024

Implementing different rebalancing strategies, the High Yield Bonds Income Portfolio guaranteed the following returns.

According to the available data source, we assume we built the portfolio on January 1985.

Portfolio returns are calculated in USD, assuming:
  • No fees or capital gain taxes
  • the reinvestment of dividends, if existing
HIGH YIELD BONDS INCOME PORTFOLIO RETURNS
Period: January 1985 - September 2024
Annualized Returns
Swipe left to see all data
Return (%) and number of rebalances as of Sep 30, 2024
Rebalancing Strategy 1Y 5Y 10Y 30Y MAX
(~40Y)
No Rebalancing 18.18 (0) 1.35 (0) 3.20 (0) 7.08 (0) 7.91 (0)
Yearly Rebalancing 17.69 (1) 1.88 (5) 3.44 (10) 6.95 (30) 7.83 (40)
Half Yearly Rebalancing 17.70 (2) 1.88 (10) 3.46 (20) 6.90 (60) 7.80 (80)
Quarterly Rebalancing 17.78 (4) 1.90 (20) 3.46 (40) 6.93 (120) 7.81 (159)
5% Tolerance per asset 17.54 (0) 1.99 (1) 3.50 (1) 6.99 (7) 7.85 (7)
10% Tolerance per asset 17.71 (0) 1.72 (0) 3.37 (0) 6.95 (2) 7.82 (2)

In order to have complete information about the portfolio, please refer to the High Yield Bonds Income Portfolio: ETF allocation and returns page.

Performances as of Sep 30, 2024

Historical returns and stats of High Yield Bonds Income Portfolio, after implementing different rebalancing strategies.

HIGH YIELD BONDS INCOME PORTFOLIO PERFORMANCES
Period: January 1985 - September 2024
Swipe left to see all data
Standard Deviation
Max Drawdown (%)
Rebalancing Strategy Return % Std Dev(%) Ret. / Std Dev MaxDD(%) Ret. / MaxDD
No Rebalancing 7.91 (0) 8.47 0.93 -24.01 0.33
Yearly Rebalancing 7.83 (40) 8.18 0.96 -23.97 0.33
Half Yearly Rebalancing 7.80 (80) 8.18 0.95 -23.98 0.33
Quarterly Rebalancing 7.81 (159) 8.19 0.95 -23.96 0.33
5% Tolerance per asset 7.85 (7) 8.15 0.96 -24.02 0.33
10% Tolerance per asset 7.82 (2) 8.25 0.95 -23.92 0.33
(*) Since Jan 1985 (~40 yrs) | Annualized Returns (and number of rebalances)

Drawdowns as of Sep 30, 2024

Historical Drawdowns of High Yield Bonds Income Portfolio, after implementing different rebalancing strategies.

HIGH YIELD BONDS INCOME PORTFOLIO DRAWDOWNS
Period: January 1985 - September 2024
Swipe left to see all data
Rebalancing
Tolerance per asset
No Rebalancing Yearly Half Yearly Quarterly 5% 10%
-24.01
May 2008 - Jul 2009
-23.97
Nov 2007 - Jul 2009
-23.98
Nov 2007 - Jul 2009
-23.96
Nov 2007 - Jul 2009
-24.02
Nov 2007 - Jul 2009
-23.92
Nov 2007 - Jul 2009
-23.80
Sep 2021 - In progress
-21.84
Sep 2021 - In progress
-21.96
Sep 2021 - In progress
-21.99
Sep 2021 - In progress
-21.72
Sep 2021 - In progress
-22.44
Sep 2021 - In progress
-13.03
Feb 2020 - Jul 2020
-11.99
Feb 2020 - Jul 2020
-11.99
Feb 2020 - Jul 2020
-11.99
Feb 2020 - Jul 2020
-11.90
Feb 2020 - Jul 2020
-11.83
Feb 2020 - Jul 2020
-9.74
May 1998 - Apr 1999
-8.48
Aug 1998 - Apr 1999
-8.73
Aug 1998 - Apr 1999
-8.73
Aug 1998 - Mar 1999
-8.40
Aug 1998 - Mar 1999
-9.74
May 1998 - Apr 1999
-8.32
May 2013 - Apr 2014
-7.89
Aug 1990 - Feb 1991
-7.88
Aug 1990 - Feb 1991
-7.92
Aug 1990 - Feb 1991
-7.90
Aug 1990 - Feb 1991
-7.90
Aug 1990 - Feb 1991
5 Worst Drawdowns - Average
-15.78 -14.83 -14.91 -14.92 -14.79 -15.17
10 Worst Drawdowns - Average
-11.58 -11.04 -11.08 -11.08 -11.06 -11.25

For a deeper insight, please refer to the High Yield Bonds Income Portfolio: ETF allocation and returns page.