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Second Grader's Starter Portfolio

Last updated Oct 3, 2023

Second Grader's Starter Portfolio is a lazy portfolio by Paul Farrell. It is designed as a simple portfolio to follow for beginner investors with small capital and long investment horizon. Farrell gives an example of a second-grader who received a $10,000 gift from his grandmother.

Asset Allocation


BND 10%VTI 60%VEU 30%BondBondEquityEquity
PositionCategory/SectorWeight
BND
Vanguard Total Bond Market ETF
Total Bond Market10%
VTI
Vanguard Total Stock Market ETF
Large Cap Growth Equities60%
VEU
Vanguard FTSE All-World ex-US ETF
Foreign Large Cap Equities30%

Performance

The chart shows the growth of an initial investment of $10,000 in Second Grader's Starter Portfolio, comparing it to the performance of the S&P 500 index or another benchmark. All prices have been adjusted for splits and dividends. The portfolio is rebalanced Quarterly


0.00%2.00%4.00%6.00%8.00%10.00%12.00%MayJuneJulyAugustSeptemberOctober
1.95%
4.84%
Second Grader's Starter Portfolio
Benchmark (^GSPC)
Portfolio components

Returns

As of Oct 3, 2023, the Second Grader's Starter Portfolio returned 8.40% Year-To-Date and 7.97% of annualized return in the last 10 years.


1 month6 monthsYear-To-Date1 year5 years (annualized)10 years (annualized)
Benchmark-5.04%4.58%11.69%16.58%8.16%9.78%
Second Grader's Starter Portfolio-4.90%1.54%8.40%15.33%6.69%7.97%
VTI
Vanguard Total Stock Market ETF
-5.24%5.14%12.23%17.16%9.22%11.17%
BND
Vanguard Total Bond Market ETF
-2.68%-5.46%-1.58%-0.80%0.09%1.02%
VEU
Vanguard FTSE All-World ex-US ETF
-4.93%-3.22%4.18%16.87%3.12%3.48%

Monthly Returns Heatmap


JanFebMarAprMayJunJulAugSepOctNovDec
20232.74%1.27%-0.88%5.41%3.32%-2.55%-4.12%

Sharpe Ratio

The current Second Grader's Starter Portfolio Sharpe ratio is 1.12. A Sharpe ratio greater than 1.0 is considered acceptable.

-1.000.001.002.003.004.001.12

The Sharpe ratio of Second Grader's Starter Portfolio lies between the 25th and 75th percentiles. It indicates that the portfolio's risk-adjusted performance is in line with the majority of portfolios. This suggests a balanced approach to risk and return, which might be suitable for a broad range of investors.


Rolling 12-month Sharpe Ratio-0.500.000.501.00MayJuneJulyAugustSeptemberOctober
1.12
1.04
Second Grader's Starter Portfolio
Benchmark (^GSPC)
Portfolio components

Dividend yield

Second Grader's Starter Portfolio granted a 2.22% dividend yield in the last twelve months.


TTM20222021202020192018201720162015201420132012
Second Grader's Starter Portfolio2.22%2.23%1.93%1.78%2.46%2.76%2.36%2.67%2.78%2.94%2.66%3.19%
VTI
Vanguard Total Stock Market ETF
1.58%1.68%1.25%1.48%1.88%2.21%1.88%2.15%2.27%2.06%2.07%2.58%
BND
Vanguard Total Bond Market ETF
3.12%2.66%2.06%2.37%2.97%3.16%2.94%2.98%3.13%3.47%3.57%4.27%
VEU
Vanguard FTSE All-World ex-US ETF
3.20%3.18%3.23%2.16%3.44%3.74%3.14%3.60%3.70%4.53%3.54%4.02%

Expense Ratio

The Second Grader's Starter Portfolio has an expense ratio of 0.04% which is considered to be low. Below you can find the expense ratios of portfolio funds side-by-side and effortlessly compare their relative costs.


0.07%
0.00%2.15%
0.03%
0.00%2.15%

Risk-Adjusted Performance

This table presents a comparison of risk-adjusted performance metrics for positions. Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.


Sharpe ratioSortino ratioOmega ratioCalmar ratioUlcer Index
VTI
Vanguard Total Stock Market ETF
1.07
BND
Vanguard Total Bond Market ETF
-0.03
VEU
Vanguard FTSE All-World ex-US ETF
1.16

Asset Correlations Table

The table below displays the correlation coefficients between the individual components of the portfolio, the entire portfolio, and the chosen benchmark.

BNDVEUVTI
BND1.00-0.15-0.20
VEU-0.151.000.85
VTI-0.200.851.00

Drawdowns Chart

The Drawdowns chart displays portfolio losses from any high point along the way.


-16.00%-14.00%-12.00%-10.00%-8.00%-6.00%-4.00%MayJuneJulyAugustSeptemberOctober
-11.38%
-10.59%
Second Grader's Starter Portfolio
Benchmark (^GSPC)
Portfolio components

Worst Drawdowns

The table below shows the maximum drawdowns of the Second Grader's Starter Portfolio. A maximum drawdown is an indicator of risk. It shows a reduction in portfolio value from its maximum due to a series of losing trades.

The maximum drawdown since January 2010 for the Second Grader's Starter Portfolio is 52.66%, recorded on Mar 9, 2009. It took 884 trading sessions for the portfolio to recover.


Depth

Start

To Bottom

Bottom

To Recover

End

Total

-52.66%Nov 1, 2007339Mar 9, 2009884Sep 7, 20121223
-31.07%Feb 13, 202027Mar 23, 202099Aug 12, 2020126
-25.11%Nov 9, 2021235Oct 14, 2022
-16.87%Jan 29, 2018229Dec 24, 201881Apr 23, 2019310
-16.3%May 22, 2015183Feb 11, 2016126Aug 11, 2016309

Volatility Chart

The current Second Grader's Starter Portfolio volatility is 2.76%, representing the average percentage change in the investments's value, either up or down over the past month. The chart below shows the rolling one-month volatility.


2.00%2.50%3.00%3.50%4.00%4.50%5.00%5.50%MayJuneJulyAugustSeptemberOctober
2.76%
3.15%
Second Grader's Starter Portfolio
Benchmark (^GSPC)
Portfolio components