Second Grader’s Portfolio: backtest, returns and drawdowns
Sixty percent US stocks, thirty percent international stocks and ten percent bonds.
Data updated October 2026
Created by: Allan Roth (2009)
Allocation
| Asset class | ETF used in the backtest | Weight |
|---|---|---|
| US total stock market | ITOT | 60% |
| International stocks | VXUS | 30% |
| US aggregate bonds | BND | 10% |
- Stocks 90.0%
- Bonds 10%
From October 2011 to October 2026 the Second Grader’s Portfolio returned 11.2% a year on average, with annual volatility of 14.8%. Its deepest fall was 31.2%, from February 2020 to March 2020, recovered in about 6 months.
Its best year was 2019 (+25.8%) and its worst 2022 (−17.8%).
Over the same period 100% US stocks returned 14.3% a year with a maximum fall of 35.0%.
Key figures
- Annual return (CAGR)
- +11.2%
- Annual volatility
- 14.8%
- Maximum drawdown
- −31.2%
- Recovery time
- 6 months
- Sharpe
- 0.70
- Sortino
- 0.97
- Worst year
- 2022: −17.8%
- Positive years
- 11/14
Growth of $10,000
Drawdowns
Returns by calendar year
| Year | Second Grader’s Portfolio | 60/40 Portfolio | 100% Stocks |
|---|---|---|---|
| 2026(partial) | +10.8% | +6.9% | +12.7% |
| 2025 | +20.6% | +13.0% | +17.0% |
| 2024 | +15.9% | +14.8% | +23.8% |
| 2023 | +21.0% | +17.9% | +26.1% |
| 2022 | −17.8% | −16.9% | −19.5% |
| 2021 | +17.9% | +14.6% | +25.7% |
| 2020 | +16.4% | +15.4% | +20.7% |
| 2019 | +25.8% | +21.9% | +30.7% |
| 2018 | −7.5% | −3.1% | −5.3% |
| 2017 | +21.4% | +14.2% | +21.4% |
| 2016 | +8.9% | +8.3% | +12.1% |
| 2015 | −1.3% | +0.2% | −0.1% |
| 2014 | +6.5% | +9.7% | +12.2% |
| 2013 | +23.2% | +18.2% | +31.8% |
| 2012 | +14.8% | +10.4% | +14.7% |
| 2011(partial) | +2.2% | +3.1% | +4.1% |
History
- Created by
- Allan Roth
- Who
- Financial planner and columnist
- Year
- 2009
- Source
- How a Second Grader Beats Wall Street (2009)
- Funds in the backtest
- 3
Allan Roth, a financial planner and columnist, wrote How a Second Grader Beats Wall Street (2009) around a three-fund portfolio picked with his son when the boy was in second grade: 60% US total stock market, 30% international stocks and 10% US bonds.
The point of the story is that a portfolio simple enough for a child to choose can compete with professionally managed money, because low costs and broad diversification do most of the work.
Strengths and weaknesses
Strengths
- Three funds, global
- Very low cost
- 90% in stocks for long-term growth
Weaknesses
- Only 10% in bonds: drawdowns close to the stock market’s
- No real assets
- Suited to long horizons only
How it works
A portfolio simple enough for a child to pick, built on three low-cost index funds.
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 Second Grader’s Portfolio?
Allan Roth (financial planner and columnist), 2009. Source: How a Second Grader Beats Wall Street (2009).
What is the Second Grader’s Portfolio?
Sixty percent US stocks, thirty percent international stocks and ten percent bonds. Allocation: 60% us total stock market, 30% international stocks, 10% us aggregate bonds. Created by: Allan Roth (2009).
What is the Second Grader’s Portfolio return?
In the backtest from October 2011 to October 2026 it returned 11.2% a year on average, with a maximum drawdown of 31.2%. 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 Second Grader’s Portfolio?
31.2%, from February 2020 to March 2020; it took about 6 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.