Couch Potato Portfolio: backtest, returns and drawdowns
Half in an S&P 500 index fund, half in a bond index fund, rebalanced once a year.
Data updated October 2026
Created by: Scott Burns (1991)
Allocation
| Asset class | ETF used in the backtest | Weight |
|---|---|---|
| S&P 500 | IVV | 50% |
| US aggregate bonds | AGG | 50% |
- Stocks 50%
- Bonds 50%
From October 2011 to October 2026 the Couch Potato Portfolio returned 8.6% a year on average, with annual volatility of 8.7%. Its deepest fall was 20.0%, from December 2021 to October 2022, recovered in about 26 months.
Its best year was 2019 (+19.9%) and its worst 2022 (−15.6%).
Over the same period 100% US stocks returned 14.3% a year with a maximum fall of 35.0%.
Key figures
- Annual return (CAGR)
- +8.6%
- Annual volatility
- 8.7%
- Maximum drawdown
- −20.0%
- Recovery time
- 26 months
- Sharpe
- 0.81
- Sortino
- 1.14
- Worst year
- 2022: −15.6%
- Positive years
- 12/14
Growth of $10,000
Drawdowns
Returns by calendar year
| Year | Couch Potato Portfolio | 60/40 Portfolio | 100% Stocks |
|---|---|---|---|
| 2026(partial) | +5.8% | +6.9% | +12.7% |
| 2025 | +12.5% | +13.0% | +17.0% |
| 2024 | +13.1% | +14.8% | +23.8% |
| 2023 | +16.0% | +17.9% | +26.1% |
| 2022 | −15.6% | −16.9% | −19.5% |
| 2021 | +13.5% | +14.6% | +25.7% |
| 2020 | +12.9% | +15.4% | +20.7% |
| 2019 | +19.9% | +21.9% | +30.7% |
| 2018 | −2.2% | −3.1% | −5.3% |
| 2017 | +12.7% | +14.2% | +21.4% |
| 2016 | +7.3% | +8.3% | +12.1% |
| 2015 | +0.9% | +0.2% | −0.1% |
| 2014 | +9.8% | +9.7% | +12.2% |
| 2013 | +15.2% | +18.2% | +31.8% |
| 2012 | +9.9% | +10.4% | +14.7% |
| 2011(partial) | +2.7% | +3.1% | +4.1% |
History
- Created by
- Scott Burns
- Who
- Personal finance columnist
- Year
- 1991
- Source
- Scott Burns’ column in The Dallas Morning News (1991)
- Funds in the backtest
- 2
Scott Burns, a long-time personal finance columnist, introduced the Couch Potato Portfolio in The Dallas Morning News in 1991: half in an S&P 500 index fund and half in a bond index fund, rebalanced once a year. His point was that such an effortless mix could compete with most professionally managed funds.
Burns later proposed many variants, including the Margaritaville with international stocks and inflation-protected bonds. The name also travelled to Canada, where “Couch Potato” is still widely used for simple index portfolios.
Strengths and weaknesses
Strengths
- Two funds, half and half
- Very cheap and easy to rebalance
- Bonds cushion a large part of stock market falls
Weaknesses
- Only US large caps on the stock side
- Bonds and stocks can fall together, as in 2022
- No protection from real assets
How it works
An effortless two-fund mix that asks nothing of the investor but a yearly rebalance.
Backtest with total-return ETF prices (dividends reinvested), rebalanced to target weights on the first trading day of each year. Where a Vanguard fund has a short price history in our data, an iShares fund on the same market is used (for example ITOT for VTI, IVV for VOO). No fees, taxes or currency effects; first and last years are partial. Past results do not predict future returns.
Questions
Who created the Couch Potato Portfolio?
Scott Burns (personal finance columnist), 1991. Source: Scott Burns’ column in The Dallas Morning News (1991).
What is the Couch Potato Portfolio?
Half in an S&P 500 index fund, half in a bond index fund, rebalanced once a year. Allocation: 50% s&p 500, 50% us aggregate bonds. Created by: Scott Burns (1991).
What is the Couch Potato Portfolio return?
In the backtest from October 2011 to October 2026 it returned 8.6% a year on average, with a maximum drawdown of 20.0%. US dollars, before fees and taxes.
How often should it be rebalanced?
The backtest rebalances once a year back to the target weights. Rebalancing more often changes little and adds costs; some investors rebalance only when a weight drifts beyond a threshold.
What was the worst drawdown of the Couch Potato Portfolio?
20.0%, from December 2021 to October 2022; it took about 26 months to get back to the previous high.
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- Versione italiana
Source: MarketStack end-of-day prices. Historical and educational content: not a forecast and not investment advice. MEDGE Capital does not recommend buying or selling any instrument. Risk disclaimer.