PORTFOLIO COMPARISON / ONE VARIABLE

Short vs Long Duration Bond Portfolio Backtest

Change bond duration inside a multi-asset portfolio and measure the effect across inflation and recession regimes.

THE QUESTION

Is the drawdown protection from long-duration bonds stable across different inflation and rate environments?

BASE PORTFOLIOIntermediate-duration bond sleeve
CONTROLLED CHANGEShort- and long-duration bond sleeves
ONLY CHANGED VARIABLEBond duration

The base rules, data treatment, and calculation assumptions remain visible throughout the comparison. Review the portfolio return and drawdown metrics used to interpret this result.

WHAT TO COMPARE

Read the trade-off as a system.

  1. 01Portfolio drawdown
  2. 02Rate sensitivity
  3. 03Volatility
  4. 04Diversification benefit

WHEN TO LOOK

Locate where the difference appeared.

DisinflationRising-rate cyclesRecessionsInflation shocks

A useful comparison shows whether an advantage was broad or created by one unusually favorable period. For a direct test of this risk, compare the same rules across multiple portfolio start dates.

OBSERVED RESULT / REAL MARKET DATA

What the comparison actually produced.

The short-duration sleeve produced the highest ending value and the shallowest drawdown. Long-duration Treasuries finished $3,326 below the BND baseline and had a 6.48-point deeper drawdown, largely reflecting the 2022 rate shock.

WINDOWAug 2016–Jul 2026
CAPITAL$10,000 initial investment
CALCULATIONAll variants keep 60% VTI and change only the 40% bond proxy: BND, SHY, or TLT. Target weights are restored annually.
Bond sleeveEnding valueAnnualized returnMaximum drawdown
BND aggregate bonds$24,6429.44%−21.76%
SHY short Treasuries$25,0329.61%−20.50%
TLT long Treasuries$21,3167.87%−28.24%

TEST ANOTHER ALLOCATION OR RULE

Change one variable in AI Backtest.

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