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The 40/60 U.S. Stocks/Bonds Portfolio divides 40% to U.S. stocks, offering broad market exposure, and 60% to U.S. bonds, which enhances stability and income. This allocation focuses on reducing volatility while still capturing some growth potential.
The backtesting period is limited by the inception date of US Total Stock Market (TOTSTOCKMKT.X): Jun 30, 1926.
A quick overview of the assets within the portfolio, its performance and main metrics.
The portfolio consists of 2 asset classes.
| Name / Ticker | Type | Currency | Inception | Weight |
|---|---|---|---|---|
US Total Stock Market TOTSTOCKMKT.X | Asset Class | USD | Jun 30, 1926 | 40% |
Total Bond Market (US Aggregate Bond) TOTBONDMKT.X | Asset Class | USD | Dec 30, 1870 | 60% |
The backtest spans over a period of 98 years. With an annual return of 7.51% for 40/60 US Stocks/Bonds, the cumulative return over that period amounts to 124613%.
| Portfolio Score | 40/60 US Stocks/Bonds |
|---|---|
| Portfolio Score |
| Returns | 40/60 US Stocks/Bonds |
|---|---|
| Month-to-Date | 1.68% |
| Year-to-Date | 10.9% |
| 3M | 2.01% |
| 6M | 7.07% |
| Annualized Return (3Y) | 2.22% |
| Annualized Return (5Y) | 6.04% |
| Annualized Return (10Y) | 6.09% |
| Annualized Return (20Y) | 6.31% |
| Annualized Return (All, 98.4Y) | 7.51% |
| Risk | 40/60 US Stocks/Bonds |
|---|---|
| Annual Volatility | 4.65% |
| Max Drawdown | -42.92% |
| Sharpe Ratio | 1.56 |
| Sortino Ratio | 2.27 |
| Adjusted Sortino Ratio | 1.61 |
With a projected annual return (CAGR) of 7.51% and an initial investment of $10,000, 40/60 US Stocks/Bonds would have the following projected capital growth over the next 50 years.
| Year | Starting Capital | Ending Capital | Total Gain | Avg Monthly Gain | Cumulative Return |
|---|---|---|---|---|---|
| $10,000 | $10,751 | $751 | $63 | 7.5% | |
| 5 | $14,363 | $15,442 | $1,079 | $90 | 54.4% |
| 10 | $20,629 | $22,179 | $1,549 | $129 | 122% |
| 15 | $29,630 | $31,855 | $2,225 | $185 | 219% |
| 20 | $42,558 | $45,754 | $3,196 | $266 | 358% |
| 50 | $373,631 | $401,691 | $28,060 | $2,338 | 3,917% |
A detailed look at the returns of the portfolio.
| Portfolio | All (98.4Y) | 20Y | 10Y | 5Y | 3Y | 1Y |
|---|---|---|---|---|---|---|
| 40/60 US Stocks/Bonds | 7.51% | 6.31% | 6.09% | 6.04% | 2.22% | 16.7% |
| Year | 40/60 US Stocks/Bonds |
|---|---|
| 1926 | 5.21% |
| 1927 | 16.47% |
| 1928 | 15% |
| 1929 | -1.93% |
| 1930 | -6.68% |
| 1931 | -18.88% |
| 1932 | 3.84% |
| 1933 | 24.68% |
| 1934 | 5.43% |
| 1935 | 20.89% |
| Portfolio | Positive Years | Negative Years | Positive Ratio | Best Return Years | Worst Return Years |
| 40/60 US Stocks/Bonds | 82 | 17 | 82.83% | 99 | 99 |
Let's analyze how much risk the portfoliohas.
A drawdown represents the period of decline an investor experiences between a portfolio's peak (new high) and its subsequent low, also known as the valley (before it begins to recover). The table below highlights the five largest drawdowns encountered by the portfolio.
| Drawdown period | Recovery period | Total | |||||
|---|---|---|---|---|---|---|---|
| Max drawdown | Start | Valley | # Months | End | # Months | # Months | Chart |
| -42.92% | 1929-09-02 | 1932-05-31 | 33 | 1935-10-01 | 40 | 73 | |
| -21.91% | 2007-11-01 | 2008-10-10 | 11 | 2009-11-16 | 13 | 25 | |
| -20.61% | 1937-04-01 | 1938-03-31 | 12 | 1939-09-29 | 18 | 30 | |
| -19.58% | 2021-11-08 | 2022-10-14 | 11 | 2024-06-05 | 20 | 31 | |
| -16.46% | 2020-02-21 | 2020-03-18 | 1 | 2020-06-08 | 3 | 4 | |
| -14.65% | 1973-01-02 | 1974-09-30 | 21 | 1975-04-21 | 7 | 28 | |
| -13.48% | 1987-08-26 | 1987-11-30 | 3 | 1988-10-27 | 11 | 14 | |
| -11.41% | 2001-02-02 | 2002-07-23 | 18 | 2003-05-30 | 10 | 28 | |
| -10.36% | 1946-06-03 | 1947-05-30 | 12 | 1949-09-12 | 28 | 39 | |
| -10.06% | 1968-12-02 | 1970-06-30 | 19 | 1970-11-27 | 5 | 24 | |
40/60 US Stocks/Bonds took approximately 43 months on average to recover from major drawdowns of 20% or more. The largest drawdown reached -42.92% and the longest drawdown period lasted 73 months.