Three-Fund Portfolio 80/20: the Risk X-Ray
The same three building blocks as the classic three-fund page, with the risk dial turned to 80/20, the allocation a young accumulator typically holds. Comparing the two pages side by side shows exactly what the extra 20 points of equity buy and cost: the drawdown deepens, the bond sleeve's risk share collapses, and the portfolio becomes, in risk terms, very close to a pure equity position. The numbers below quantify how close.
Aggressive variant of the Bogleheads three-fund allocation
Analysis as of Friday 2026-08-28 · recomputed weekly from daily market data · methodology
What the Three-Fund Portfolio 80/20 holds
The published allocation: 80% world stocks (three-quarters US, one-quarter international), 20% US bonds.
| Fund | Measured role | Weight | Expense ratio |
|---|---|---|---|
| VTI Vanguard Total Stock Market ETF | correlated core | 56% | 0.03% |
| VEA Vanguard FTSE Developed Markets ETF | correlated core | 18% | 0.03% |
| VWO Vanguard FTSE Emerging Markets ETF | correlated core | 6% | 0.06% |
| BND Vanguard Total Bond Market ETF | shock absorber | 20% | – |
International implemented as VEA plus VWO in a 3-to-1 split, standing in for a total-international fund.
Where the risk actually sits
Measured through the covariance matrix, VTI dominates the risk budget at 69.8% of total risk for 56.0% of capital; at the other end, BND accounts for only 2.9%.
| Fund | Share of risk | Risk | Capital | Beta | Role |
|---|---|---|---|---|---|
| VTI | 69.8% | 56.0% | 1.01 | correlated core | |
| VEA | 20.9% | 18.0% | 0.79 | correlated core | |
| VWO | 6.4% | 6.0% | 0.75 | correlated core | |
| BND | 2.9% | 20.0% | 0.06 | shock absorber |
How the pieces move together
VTI + VEA + VWO move as one block (average correlation 0.77): together they are 80.0% of the capital and 97.1% of the risk.
| Holding | VTI | VEA | VWO | BND |
|---|---|---|---|---|
| VTI 56% | 1.00 | |||
| VEA 18% | 0.77 | 1.00 | ||
| VWO 6% | 0.71 | 0.83 | 1.00 | |
| BND 20% | 0.20 | 0.26 | 0.21 | 1.00 |
Pearson correlation of weekly returns · 156-week common window ending 2026-08-28 · pairbook.io
The worst it would have been
Over the analysis window, this mix would have fallen at worst -11.5% (from the week of 2025-02-21 to 2025-04-11), shallower than the S&P 500's -16.9% over the same weeks, and it has since recovered that peak.
Worst weeks of the mix: -6.9% (week ending 2025-04-11), -3.0% (week ending 2026-03-13), -3.0% (week ending 2024-09-13).
FAQ
At 80/20, do bonds still matter?
The risk-contribution table gives the honest answer: the bond sleeve holds 20% of the capital but a single-digit share of the risk. It softens the worst weeks somewhat, the drawdown section shows by how much, but this portfolio's behavior is overwhelmingly its equity.
Why not just hold 100% stocks then?
The 20% bond sleeve is less about risk reduction than about having something to rebalance from in a crash, and about behavior: a smaller drawdown is easier to hold. The drawdown comparison with SPY above puts a number on that cushion.
Run this analysis on your own portfolio
The same X-ray, risk contributions, correlation blocks, ETF overlap, runs on any mix of 4,700+ US stocks and ETFs: paste your holdings into the free portfolio X-ray, or ask an AI assistant with the PairBook MCP server.
