William Bernstein’s Coward Portfolio

Background

The Coward’s Portfolio was developed by William Bernstein, a financial theorist, author, and one of the earliest advocates of evidence-based investing for individual investors. Bernstein, a neurologist by training, became known for translating the principles of Modern Portfolio Theory into practical strategies that everyday investors could implement using low-cost index funds. The Coward’s Portfolio embodies his philosophy that diversification—not prediction—is the key to long-term investment success. Its name is self-deprecating humor: it’s “cowardly” because it avoids bold bets, yet it’s wise because it minimizes the chances of catastrophic loss while still capturing global market growth.

Primary Goals

The primary goal of the Coward’s Portfolio is to achieve moderate, risk-adjusted growth through global diversification. Rather than chasing high returns, it focuses on steady compounding, broad exposure, and risk management. Bernstein designed it for investors who want equity exposure sufficient for long-term growth but with significant ballast from safe assets to preserve capital during downturns. A secondary goal is emotional stability—providing an allocation that allows investors to remain calm and disciplined through volatile market cycles.

The portfolio is structured to perform across a range of economic environments:

• Economic expansion: U.S. and international equities deliver growth through rising corporate profits and global economic activity.
• Inflationary periods: Real estate and international holdings help preserve purchasing power when domestic assets weaken.
• Deflation or recession: Short-term Treasury bonds offer stability and liquidity, protecting capital when risk assets decline.
• Market volatility: Broad diversification across size, style, geography, and asset type smooths returns and reduces drawdowns.

Bernstein’s approach reflects the idea that investors can earn sufficient returns by diversifying intelligently and avoiding concentrated risk—demonstrating that “cowardice” can indeed be a virtue in investing.

Construction

The Coward’s Portfolio distributes assets across nine categories, blending U.S. and international equities, real estate, and short-term government bonds. Each component serves a defined role in balancing growth and stability:

• U.S. total market stocks: Provide broad exposure to the overall American economy and serve as the foundation for long-term growth.
• U.S. value and small-cap stocks: Add exposure to factors historically associated with higher returns—smaller, value-oriented companies.
• International developed markets (Europe and Pacific): Offer geographic diversification and participation in advanced foreign economies.
• Emerging markets: Contribute additional growth potential from developing regions with expanding middle classes and productivity gains.
• Real estate (REITs): Provide inflation protection and income from income-producing commercial properties.
• Short-term Treasury bonds: Represent the defensive core of the portfolio, offering liquidity, capital preservation, and protection in recessions or deflationary periods.

A representative allocation includes approximately 60% in diversified equities and real estate—spanning U.S., international, and emerging markets—and 40% in short-term Treasury bonds for safety and stability. This globally diversified mix captures multiple sources of return while keeping volatility at a level that most investors can comfortably endure over the long term.

Performance & Returns

Total Return by Period

Updated: Nov 18, 2025

1 Day	1 Week	28 Days	90 Days	1 Year	3 Years	5 Years	10 Years
-0.17%	-1.54%	-1.20%	1.09%	5.26%	21.94%	24.34%	56.89%

Total Return by Year

2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
8.95%	11.14%	-9.89%	11.89%	8.07%	15.61%	-4.78%	11.41%	8.55%	-1.15%

10 Year Performance

Total Return	Annualized Return	CAGR	Max Drawdown	Sharpe Ratio	Sortino Ratio	Calmar Ratio	Ulcer Index
56.89%	5.05%	4.62%	-27.68%	0.20	0.24	0.18	0.06

Asset Allocation

Symbol	Description	Weight %
VTI	Vanguard Total Stock Market ETF	15.0
VTV	Vanguard Value ETF	10.0
VB	Vanguard Small-Cap ETF	5.0
VBR	Vanguard Small-Cap Value ETF	10.0
VGK	Vanguard FTSE Europe ETF	5.0
VPL	Vanguard FTSE Pacific ETF	5.0
EEM	iShares MSCI Emerging Markets ETF	5.0
VNQ	Vanguard Real Estate ETF	5.0
SHY	iShares 1-3 Year Treasury Bond ETF	40.0

Total Return Graph

Comparisons with Other Portfolios