90/10
Ninety percent in a low-cost S&P 500 index fund and ten percent in short-term government bonds, the instruction Warren Buffett described in his 2013 letter.
Based on Warren Buffett's 2013 letter to Berkshire Hathaway shareholders.
“Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.” Warren Buffett
Before the numbers. A hypothetical backtest, not a forecast: Jun 30, 2000 to Oct 9, 2026 (26.2 years), the window every published portfolio shares. Rebalanced once a year at 10 basis points a trade. The bar is the three-fund at the same stock share, 90%.
Funds younger than the window are extended by older series, each junction validated (how): VGSH by VFISX before 2009-11-23; VOO by VFINX before 2010-09-09.
What it holds
| Asset class, and the fund this backtest holds it through | Weight | Fund fee |
|---|---|---|
| US large-cap blend VOO · Vanguard S&P 500 |
90% | 0.03% |
| Short Treasuries VGSH · Vanguard Short-Term Treasury |
10% | 0.04% |
| Together | 100% | 0.03% |
The funds are the ones this backtest uses for each asset class, not a list to buy: any fund tracking the same asset class holds the same thing.
Its record against the three-fund at 90% stocks
| Statistic | 90/10 | Three-fund at 90% stocks |
|---|---|---|
| Value per $10,000 | $77,358 | $63,698 |
| Total return | 673.58% | 536.98% |
| Annual return (CAGR) | 8.10% | 7.30% |
| Standard deviation | 13.46% | 13.94% |
| Max drawdown | -50.15% | -52.63% |
| Worst calendar year | -32.65% | -35.15% |
| Longest time underwater | 1522 days | 1227 days |
| Ulcer Index | 13.82% | 13.92% |
| Sharpe ratio | 0.51 | 0.44 |
| Sortino ratio | 0.74 | 0.64 |
| Ulcer Performance Index | 0.45 | 0.39 |
The crises
| Deepest decline from a prior peak | 90/10 | Three-fund at 90% stocks |
|---|---|---|
| 2000–02 | -42.2% | -41.4% |
| 2008 | -50.1% | -52.6% |
| 2020 | -30.5% | -31.2% |
| 2022 | -22.5% | -25.5% |
2000–02 is measured from June 2000, the window's start, after the March peak; 2008 from October 2007 to June 2009; 2020 from February to April; 2022 through 2023.
Calendar years
The first and last years are partial.
The trade-off
Buffett wrote it as advice to a trustee, not as a portfolio for everyone: a simple mix that needs no manager. Ten percent in short-term Treasuries is a reserve, not a counterweight. It barely moves when stocks fall, and it is too small to soften a crash much. Over this window the worst decline was -50.1%, against -52.6% for the three-fund at 90% stocks.
What it trades away is breadth: no international stocks, no small companies beyond the S&P 500’s own weights, and nothing that rises when stocks and bonds both fall. Buffett gave no rebalancing rule; here it is rebalanced once a year, like every row.