Newfound Research has this nifty visualisation in one of their recent presentations. We are always told to include bonds in order to reduce the volatility of our portfolios to a tolerable level — to the “sleep well at night” level.
Newfound’s point — which is an obvious one — is that most of the time our bonds just sit there doing nothing. But they’ve gone another step and calculated just how often bonds actually help and how much that “sleep well at night” insurance actually costs.
