Three Asset Class Lazy Portfolios Reviewed
09/29/2010 0 comments
- Bill Schulthe, a former Smith Barney broker and author of "The Coffeehouse Investor
- Andrew Tobias, a Harvard alum and writer of 12 books including The Only Investment Guide You'll Ever Need.
- Scott Burns has covered personal finance and investments for nearly 40 years and ranks as one of the most widely read personal finance writers in the country
Bill Schultheis' Coffeehouse Portfolios
% Allocation | Description | Ticker | ETF |
34% | Total US Equities | VTSMX | VTI |
33% | Total International Equities | VGTSX | VEU |
33% | Total Bond Market | VBMFX | BND |
Scott Burns' Margarita
% Allocation | Description | Ticker | ETF |
34% | Total US Equities | VTSMX | VTI |
33% | Total International Equities | VGTSX | VEU |
33% | Vanguard Inflation-Protected Securities Fund | VIPSX | TIP |
Tobias’ 3 Fund Portfolio
% Allocation | Description | Ticker | ETF |
34% | Total US Equities | VTSMX | VTI |
33% | Total International Equities | VGTSX | VEU |
33% | Vanguard Inflation-Protected Securities Fund | VIPSX | TIP |
These are all easy to understand and easy to follow portfolios. They only require annual rebalancing and so it is not onerous to build and manage this portfolio.
Note that Tobias and Burns portfolios are identical so we combine them henceforth.
We will test the results in three dimensions:
Firstly, how does performance compare with a buy and hold strategy for a similar portfolio with monthly rebalancing. For this, we will compare the two portfolios against a 3 asset SIB and measure results.
Annual Returns | 1 year | 3 Years | 5 Years |
Tobias/Burns | 7.4 | -1.69 | 3.5 |
Schulthe | 6.78 | -2.34 | 3.87 |
3 SIB SAA | 7.4 | -1.69 | 3.5 |
3 SIB TAA | -2.86 | 0.67 | 4.14 |
6 SIB SAA | 10.63 | 1.66 | 6.72 |
6 SIB TAA | 9.0 | 10.0 | 13.0 |
Takeaways
- If you want a lazy portfolio, go for five or six asset classes – you won’t rebalance that often so having the extra classes isn’t a big overhead
- If you want to maximize returns, look for tactical asset allocation – it may be a compromise to have four or five asset classes with tactical asset allocation – historically that has delivered higher returns that buy and hold
- Consider using an on-line broker that allows on-click execution of trades at a fixed price – that makes the time and cost overhead low.
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Symbols:TIP,VTI,SPY,IWM,BND,AGG,DBC,EEM,EFA,GSG,IYR,LQD,SHY,TLT,ETF,ETF,Portfolio,Building,Asset,Allocation,Bonds,Dollar/Currencies,Earnings,Economy,Hedge,Funds,
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