What is the Average Rate of Return on an Aggressive Portfolio?

Posted by Mckenna Duncan on Sep 21, 2022

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An aggressive portfolio is designed to pursue above-average returns. These portfolios strive to provide some of the highest returns of all portfolio configurations. But for those returns, investors must take on higher risk (i.e., volatility). This type of portfolio is for those with a high risk tolerance. Generally, this means that most retirees will avoid an aggressive portfolio. We’ll look at the historical returns of this portfolio type and what’s involved with creating it.

What Is An Aggressive Portfolio?

An aggressive portfolio focuses on growth rather than income, making it less suited for retirement accounts. This isn’t to say a retirement account can’t have an aggressive portfolio. It all depends on the investor’s risk tolerance, which would have to be high.

Because an aggressive portfolio is focused on growth, it is very volatile. The portfolio’s heavy concentration in equities creates this volatility. 

An equity concentration of at least 70% is considered aggressive. The remaining 30% is allocated to bonds. From here, configurations get more aggressive:

80/20 — 80% equities / 20% bonds

90/20 — 90% equities / 10% bonds

100% equities

Next, we’ll look at the returns for an aggressive portfolio.

Aggressive Portfolio Returns

From Vanguard’s portfolio allocations page, we can see the returns for an aggressive portfolio were among the highest of all portfolio configurations. But they were also the most volatile.

70% Equity / 30% Fixed income:

  • Average annual return 9.21%
  • Best year (1933) 44.45%
  • Worst year (1931) –31.59%
  • Years with a loss 23 of 94

80% Equity / 20% Fixed income:

  • Average annual return 9.61%
  • Best year (1933) 48.01%
  • Worst year (1931) –35.52%
  • Years with a loss 24 of 94

90% Equity / 10% Fixed income:

  • Average annual return 9.97%
  • Best year (1933) 51.26%
  • Worst year (1931) –39.37%
  • Years with a loss 24 of 94

100% Equities:

  • Average annual return 10.29%
  • Best year (1933) 54.20%
  • Worst year (1931) –43.13%
  • Years with a loss 26 of 94

An aggressive portfolio is allocated largely to stocks. The types of stocks are up to the investor. An investor can potentially decrease some of the portfolio’s volatility by choosing less volatile stocks. But this could also reduce the portfolio’s returns and may even move it out of the aggressive classification and into moderate. An aggressive portfolio contains mostly equities.

The main theme with aggressive portfolios is that they are mostly seeking to provide above average returns.. Many brokerages can easily create an aggressive portfolio for investors using robo advisor services. Additionally, an investor can work with a financial advisor to create an aggressive portfolio.

This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.

Examples shown are hypothetical and for illustrative purposes only.

Past performance is no guarantee of future returns. Investing involves risks, including the loss of principal. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.

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