Many investors assume their accounts have achieved good returns this year. After all, the S&P 500 Index is up nearly 9.5% through October 8, including dividends. But that doesn’t necessarily mean your account has an inflation-beating return for the year depending on your bond and international stock exposure.

And while bonds and foreign stocks have been drags on portfolios this year, owning them is no reason to change your allocation. Now’s a good time for a portfolio assessment or a moment of understanding what you own and why – and how asset class returns have diverged this year.

A Tale of Two Balanced Portfolios

Let’s say you’re a balanced investor (around 60% stocks and 40% bonds) and you have all your money in one fund – the Vanguard Balanced Index fund (VBINX). That fund keeps 60% of its assets in U.S. stocks and 40% of its assets in U.S. bonds, and it’s up 4.29% for this year through yesterday. That’s a decent return, but it seems far away from the 9.5% return of U.S. stocks.

If you’re guessing that bonds have been a drag on portfolios this year, you’re right. The Bloomberg Barclays U.S. Aggregate Index, the main U.S. bond benchmark is down 2.53% for the year. When 40% of your portfolio is down it will necessarily damp the effect from the part of the portfolio that has done well. And while that can make you wish you didn’t own any bonds, your bonds will save you the next time the stock market tanks – especially if they are government bonds. A 100% domestic stock portfolio – especially when the S&P 500 is trading at expensive valuations – probably isn’t a good idea for any investor. Most people can’t handle the volatility of a 100% stock portfolio even when the market is cheap on reliable long-term metrics like the Shiller PE. And you own bonds as a kind of insurance policy that happened not to pay off this year. That’s fine; you’re not supposed to make an insurance claim every year. So if you’ve captured a 4% return from your balanced portfolio so far this year, that’s a good return.