William Bernstein’s Coward’s Portfolio

william_bernstein-William Bernstein, investment manager and author, first introduced a version of his “Coward’s portfolio” in 1996.

The “coward” refers not to the investor’s risk tolerance but to the strategy of hedging one’s bets and having slices of a number of asset classes.

An indexed 60% equity/ 40% fixed income Coward’s portfolio would consist of the following asset classes:

  • US large blend: 15%
  • US large value: 10%
  • US small blend : 5%
  • US small value: 10%
  • US REIT: 5%
  • European equity: 5%
  • Pacific region equity: 5%
  • Emerging markets equity: 5%
  • US short-term bond: 40%

Note that the portfolio has  a value tilt to US equity, providing an even split between US blend and US value funds (20%/20%).  The US REIT and regional international allocations are all set at equal 5% slices of the portfolio.

The chart below (click image to enlarge) illustrates the 60/40 allocation.


Bernstein’s Cowards Portfolio 60/40 allocation


Vanguard offered index funds for the Coward’s portfolio’s suggested asset classes from 1999 onwards. The following tables give return data using Vanguard investor share index funds. Larger portfolios can use lower cost admiral shares index funds. Exchange-traded fund shares may also be used for potentially lower costs. The returns period covers portfolio performance during the two bear markets in the 2000 -2010 decade, as well as subsequent recoveries.  Keep in mind that past performance does not forecast future performance.

Fund Ticker Allocation Expense ratio
S&P 500 Index VFINX 15% 0.17%
Value Index VIVAX 10% 0.24%
Small cap Index NAESX 5% 0.24%
Small value Index VISVX 10% 0.24%
REIT Index VGSIX 5% 0.24%
Europe Index VEURX 5% 0.26%
Pacific Index VPACX 5% 0.26%
Emerging markets Index VEIEX 5% 0.33%
Short-term Investment Grade VFSTX 40% 0.20%

Annual returns

Year Portfolio
2013 15.98%
2012 12.06%
2011 -1.18%
2010 13.01%
2009 24.32%
2008 -24.55%
2007 4.56%
2006 14.76%
2005 7.07%
2004 12.16%
2003 23.70%
2002 -4.00%
2001 1.72%
2000 2.82%
1999 13.79%

Compound returns

Period Return Standard deviation
3yr CAGR 8.70% 8.99%
5yr CAGR 12.53% 9.20%
10yr CAGR 6.97% 13.30%
15yr CAGR 7.03% 12.19%

See William Bernstein’s Coward’s Portfolio, google drive spreadsheet, for computations.


Barry Barnitz, administrator of both the Bogleheads® wiki and of Financial Page, a Bogleheads® blog. In addition I serve as an administrator of finiki, the Canadian financial wiki, as an administrator of la Wiki Bogleheads® España, and as an administrator of the John C. Bogle Center for Financial Literacy site.

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