Thank goodness for the weekend. Thursday and Friday were tough days in the market. But moments like this are precisely when it helps to take a step back and put things in perspective.
After markets closed on Wednesday, President Trump announced a sweeping tariff plan that sent traders scrambling. Thursday, 500 Index (VFIAX) fell 4.8%. The flagship index fund dropped another 6.0% on Friday, for a 10.5% two-day decline. Ouch.
I’ll have more to say about the tariffs in Wednesday’s Weekly Brief. I’m writing to you today (Saturday) to help put the past two days in context—especially to take a closer look at how the IVA Portfolios are holding up.
Over the past two days, the IVA Portfolios have fallen between 2.7% and 10.0%. Those are sharp declines—but still better than 500 Index’s 10.5% drop. If you own a balanced portfolio (a mix of stocks and bonds), your returns haven’t mirrored the steep losses in the headline all-stock indexes.
Looking at Vanguard’s balanced funds on Thursday and Friday, Balanced Index (VBIAX) fell 6.1%, LifeStrategy Moderate Growth (VSMGX) slid 5.3% and Wellington (VWELX), the granddaddy of balanced funds, dropped 6.6%. Vanguard’s Target Retirement funds were off between 2.3% and 8.4%.
The benefits of diversification become even more evident when we step back and look at performance since the start of the year. All of the IVA Portfolios have held up better than 500 Index in 2025. And the IVA Conservative Portfolio—which holds 35% in stocks and 65% in bonds—is down just 0.8% on the year.