No-Brainer
Four index funds in equal parts: large US stocks, small US stocks, developed international stocks and short-term bonds.
Based on William Bernstein, The Intelligent Asset Allocator (2000); the name is Paul Farrell's (The Lazy Person's Guide to Investing, 2004). The book's foreign quarter is EAFE (developed large caps) and its bonds short-term; Portfolio Charts uses ex-US small caps instead.
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, 75%.
Funds younger than the window are extended by older series, each junction validated (how): BSV by VBISX before 2007-04-10; VB by NAESX before 2004-01-30; VEA by VTMGX before 2007-07-26; 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 |
25% | 0.03% |
| US small-cap blend VB · Vanguard Small-Cap |
25% | 0.05% |
| International developed stocks VEA · Vanguard Developed Markets |
25% | 0.06% |
| Short-term bond index BSV · Vanguard Short-Term Bond |
25% | 0.03% |
| Together | 100% | 0.04% |
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 75% stocks
| Statistic | No-Brainer | Three-fund at 75% stocks |
|---|---|---|
| Value per $10,000 | $58,130 | $57,743 |
| Total return | 481.30% | 477.43% |
| Annual return (CAGR) | 6.93% | 6.90% |
| Standard deviation | 12.04% | 11.69% |
| Max drawdown | -44.65% | -44.56% |
| Worst calendar year | -26.34% | -28.15% |
| Longest time underwater | 838 days | 1046 days |
| Ulcer Index | 9.97% | 10.82% |
| Sharpe ratio | 0.46 | 0.47 |
| Sortino ratio | 0.67 | 0.68 |
| Ulcer Performance Index | 0.51 | 0.47 |
The crises
| Deepest decline from a prior peak | No-Brainer | Three-fund at 75% stocks |
|---|---|---|
| 2000–02 | -30.7% | -32.9% |
| 2008 | -44.6% | -44.6% |
| 2020 | -27.7% | -26.2% |
| 2022 | -21.6% | -24.0% |
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
William Bernstein offered it in The Intelligent Asset Allocator as a “simpleton’s portfolio”: four funds, a quarter each, nothing to forecast. Paul Farrell later named it the No-Brainer. Equal weights give small companies as much room as large ones, a tilt the total market doesn’t have, and the bonds are short-term: steady, with little to gain when interest rates fall.
Over this window its worst decline was -44.7% and its return 6.93% a year, close to the three-fund at 75% stocks (-44.6% and 6.90%). Portfolio Charts’ version holds international small caps in the foreign quarter; this one follows the book.