A 56-year backtest comparing 100% VT against three alternative regional slice allocations using 3 rebalancing strategies:
* B&H = buy and hold
* R-1y = rebalance every year
* R-5/25 = rebalance when a 5% absolute or 25% relative to target deviation occurs
The following portfolios were tested:
* **P1:** 100% VT
* **P2:** 60% VTSAX / 40% VTIAX
* **P3:** 60% VTSAX / 32% VTMGX / 8% VEMAX
* **P4:** 60% VTSAX / 20% VEUSX / 12% VPADX / 8% VEMAX
Results:
| |B&H|R-1y|R-5/25|
|:-|:-|:-|:-|
|Portfolio|gmean/stdev|gmean/stdev|gmean/stdev|
|P1|9.33/17.08|9.33/17.08|9.33/17.08|
|P2|10.03/16.73|10.04/16.59|10.14/16.55|
|P3|10.12/16.92|10.29/16.63|10.33/16.65|
|P4|10.14/17.14|10.43/16.74|10.43/16.75|
Key Takeaways:
* **VT vs. Slice:** Under a pure Buy & Hold strategy, the sliced portfolios (P2–P4) produced 0.70% to 0.81% higher annualized returns than the VT baseline (P1).
* **VT vs. Slice with rebalancing.** When rebalanced, the sliced portfolios (P2–P4) produced 0.71% to 1.1% higher returns and lower standard deviations than the VT baseline (P1).
* **The Rebalancing Bonus:** Systematically rebalancing the sliced portfolios reduced standard deviation across the board while boosting returns by an additional 0.01% to 0.29%.
Of note was that in 1970 US market cap was 69% today is \~61% but US had higher returns than xUS over that period.