MyPlanIQ Major Brokerage Investor David Swensen Six Asset Individual Investor Plan

David Swensen Six Asset Individual Investor Plan

This Plan is unrated.
Investment Options
Total Available Funds: 9
Asset Class Ticker Description Rating
Emerging Market
DIVERSIFIED EMERGING MKTS VEIEX VEIEX (Vanguard Emerging Mkts Stock Idx)
REAL ESTATE
REAL ESTATE VGSIX VGSIX (Vanguard REIT Index)
INTERNATIONAL EQUITY
Foreign Large Blend VGTSX VGTSX (Vanguard Total Intl Stock Index)
Others
ROOT CASH Money Market
FIXED INCOME
SHORT GOVERNMENT VFISX Vanguard Short-Term Treasury Inv
Inflation-Protected Bond VIPSX VIPSX (Vanguard Inflation-Protected Secs)
Intermediate Government VFITX Vanguard Interm-Term Treasury Inv
US EQUITY
LARGE BLEND VTSMX VTSMX (Vanguard Total Stock Mkt Idx)
Total Available Funds: 9
Asset Class Ticker Description Rating
Emerging Market
DIVERSIFIED EMERGING MKTS VEIEX VEIEX (Vanguard Emerging Mkts Stock Idx)
REAL ESTATE
REAL ESTATE VGSIX VGSIX (Vanguard REIT Index)
INTERNATIONAL EQUITY
Foreign Large Blend VGTSX VGTSX (Vanguard Total Intl Stock Index)
Others
ROOT CASH Money Market
FIXED INCOME
SHORT GOVERNMENT VFISX Vanguard Short-Term Treasury Inv
Inflation-Protected Bond VIPSX VIPSX (Vanguard Inflation-Protected Secs)
Intermediate Government VFITX Vanguard Interm-Term Treasury Inv
LONG GOVERNMENT VUSTX VUSTX (Vanguard Long-Term U.S. Treasury)
US EQUITY
LARGE BLEND VTSMX VTSMX (Vanguard Total Stock Mkt Idx)
Total Available Funds: 9
  • R*: Redemption (Minimum months to hold).
  • RT: Round Trip (number of times allowed to buy/sell in trailing 12 months).
  • WP: Waiting Period (minimum months to wait before buy again).
  • M*:Mark (p: proxy, n: not used).
Asset Class Ticker Description Rating R* RT WP Expense Yield
Emerging Market
DIVERSIFIED EMERGING MKTS VEIEX VEIEX (Vanguard Emerging Mkts Stock Idx) 99% 1 60 0 0.08% 3.29%
REAL ESTATE
REAL ESTATE VGSIX VGSIX (Vanguard REIT Index) 81% 1 60 0 0.12% 3.94%
INTERNATIONAL EQUITY
Foreign Large Blend VGTSX VGTSX (Vanguard Total Intl Stock Index) 16% 1 60 0 0.08% 3.12%
Others
ROOT CASH Money Market 0% 1 60 0 NA 4.14%
FIXED INCOME
SHORT GOVERNMENT VFISX Vanguard Short-Term Treasury Inv 100% 1 60 0 0.1% 4.13%
Inflation-Protected Bond VIPSX VIPSX (Vanguard Inflation-Protected Secs) 98% 1 60 0 0.07% 4.24%
Intermediate Government VFITX Vanguard Interm-Term Treasury Inv 97% 1 60 0 0.2% 3.38%
LONG GOVERNMENT VUSTX VUSTX (Vanguard Long-Term U.S. Treasury) 96% 1 60 0 0.1% 3.55%
US EQUITY
LARGE BLEND VTSMX VTSMX (Vanguard Total Stock Mkt Idx) 94% 1 60 0 0.03% 1.26%
Average Expense Ratio: 0.1%
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Model Portfolios
Strategic Asset Allocation - Equal Weight: Click here to see this strategy description
Equal Weight & Regular Rebalance YTD**
Return
1Yr
AR*
3Yr
AR*
5Yr
AR*
10Yr
AR*
15Yr
AR*
Click for Portfolio Details or Follow 2.2% 13.1% 1.4% 4.8% 4.2% 7.2%

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Asset Allocation Composite: Click here to see this strategy description
Strategic Asset Allocation with Dynamic Risk Adjustment YTD**
Return
1Yr
AR*
3Yr
AR*
5Yr
AR*
10Yr
AR*
15Yr
AR*
Click for Portfolio Details or Follow 3.0% 13.8% 0.8% 5.5% 5.2% 6.8%

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*     AR: Annualized Return
**   YTD: Year to Date (not annualized)
*** The above portfolios are of moderate risk, which means that more than 40% of assets are in fixed income funds.


Other Related Portfolios YTD**
Return
1Yr
AR*
3Yr
AR*
5Yr
AR*
10Yr
AR*
P David Swensen Yale Individual Investor Portfolio Annual Rebalancing 1.5% 15.0% 3.0% 7.4% 7.2%
Description
The plan consists of 9 funds. It covers 5 major asset classes and 9 minor asset classes. The major asset classes it covers are Emerging Market Equity, Fixed Income, REITs, Foreign Equity and US Equity.

 

Latest update on 1/14/2013: We now add short term and intermediate term treasury bonds to fixed income portion.

David Swensen, the Yale Endowment Manager, proposed this one size fit in all model portfolio for individual investors. The major difference between this portfolio and other conventional portfolios is that it emphasizes international equities (including emerging market equities) as well as real estate investment. Compared with various diversified portfolios, an interesting asset class missing is the commodities, which has been considered to be an excellent anti-inflation diversifier.  This is complemented with its emphasis on the inflation-protected treasury bonds. We assume annual rebalance although Swensen actually pointed out that in Yale’s institutional portfolio, they rebalanced daily, which, by his estimate, gave about 1-2% of excessive returns vs. annual rebalancing.

Compared with the Simpler Is Better (SIB) portfolios discussed in an article, one can see that Swensen's six assets exclude the commodities while putting emphasis on using fixed income for the purpose of inflation protection and hedging.

Note: it has been confusing whether Swensen advocated using long term treasury bonds or just an average duration treasury bonds. In his book Unconventional Success: A Fundamental Approach to Personal Investment, he wrote "The purity of noncallable, long-term, default-free Treasury bonds provides the most powerful diversification to investor portfolios".  Based on this sentence, it has been interpreted that he meant to use the long term treasury bond. However, recently, a reader posted a reply from David Swensen on this question in morningstar.com, which indicates the average duration of treasury bonds.

The portfolio consists of the following:

- 30% in Vanguard Total Stock Market Index (VTSMX)

- 20% in Vanguard REIT Index (VGSIX)

- 20% in Vanguard Total International Stock (VGTSX) or (15% in VGTSX and 5% in VEIEX)

- 15% in Vanguard Inflation Protected Securities (VIPSX)

- 15% in Vanguard Long Term Treasury Index (VUSTX)

The above model portfolio should be compared with the moderate model portfolios in this plan.

One can construct an ETF based plan that mostly uses mostly Vanguard ETFs.



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