This chart compares the returns of a hypothetical portfolio of 90% U.S. bonds and 10% international bonds with the returns of an all-U.S. bond portfolio over rolling five-year holding periods from 1995 through 2009.
The J.P. Morgan Non-U.S. Government Bond Index represents 12 non-U.S. government bond markets, and Barclays Capital U.S. Aggregate Index represents the U.S. bond market.
The bars on the right side of the time line show the average annual total return for each five-year holding period ended on that date. The blue bars represent the internationally diversified portfolio, and the tan bars represent the all-U.S. bond portfolio. For example, over the five-year period ended in 2009, the internationally diversified portfolio earned a 4.95% return while the all-U.S. portfolio provided a return of 4.97%.
Left of the time line appears each portfolio's standard deviation, which measures the volatility, or degree of fluctuation, in the returns. The higher the standard deviation, the greater the volatility.
For instance, a standard deviation of 3.67 for an all-U.S. bond portfolio for the five-year period ended 2009 means that approximately two-thirds of the time the return fluctuated up to 3.67 points above or below the average five-year return of 4.97%. The standard deviation for the internationally diversified portfolio was 3.97.
The chart highlights a 90% U.S. and 10% foreign bond mix because it represents a conservative exposure to international bonds. Allocating more than 20% in foreign bonds may significantly increase risk as well as return potential.
Note: This chart is shown for illustrative purposes only and does not represent the performance of any specific security. Past performance cannot guarantee future results. It is not possible to invest directly in an index.
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