David Swensen Six Asset Individual Investor Plan
Investment Model Portfolios

 

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.

Investment options of David Swensen Six Asset Individual Investor Plan

Total Available Funds: 9
Asset Class Ticker Description
US EQUITY
LARGE BLEND VTSMX VTSMX (Vanguard Total Stock Mkt Idx)
INTERNATIONAL EQUITY
Foreign Large Blend VGTSX VGTSX (Vanguard Total Intl Stock Index)
REAL ESTATE
REAL ESTATE VGSIX VGSIX (Vanguard REIT Index)
Emerging Market
DIVERSIFIED EMERGING MKTS VEIEX VEIEX (Vanguard Emerging Mkts Stock Idx)
FIXED INCOME
Inflation-Protected Bond VIPSX VIPSX (Vanguard Inflation-Protected Secs)
LONG GOVERNMENT VUSTX VUSTX (Vanguard Long-Term U.S. Treasury)
SHORT GOVERNMENT VFISX Vanguard Short-Term Treasury Inv
Intermediate Government VFITX Vanguard Interm-Term Treasury Inv
Others
ROOT CASH Money Market

Investment model portfolios

We provide two types of investment model portfolios for David Swensen Six Asset Individual Investor Plan participants. You can customize and follow a model portfolio in your plan account.

Types of portfolio strategies

These portfolios are proactively monitored and rebalanced on a monthly basis when needed, ensuring it remains in line with its target allocation.

Let us know (Email us) if you need help to create a custom model portfolio for your plan.

Example model portfolios

The following provides historical returns for example model portfolios with a moderate risk profile (at most 60% in stocks) and their comparison with benchmark index funds. You can customize these portfolios according to your own risk profile.

Strategic Asset Allocation Model Portfolio

The following portfolio is based on the MyPlanIQ Strategic Asset Allocation (SAA) strategy.

The return data shown below all delayed by 3 months. Their latest dates are all the same: 10/31/2024.
AR inception is since 12/31/2000.
Name YTD Return 1Yr AR 3Yr AR 5Yr AR 10Yr AR 15Yr AR 20Yr AR Inception
David Swensen Six Asset Individual Investor Plan Strategic Asset Allocation - Optimal Moderate NA 20.01% 0.97% 5.94% 5.33% 6.46% 6.31% 6.53%
VFINX (VANGUARD 500 INDEX FUND INVESTOR SHARES) NA 37.82% 8.86% 15.20% 12.89% 14.04% 10.46% 8.70%
VSMGX (VANGUARD LIFESTRATEGY MODERATE GROWTH FUND INVESTOR SHARES) NA 22.89% 2.25% 6.63% 6.01% 7.19% 6.10% 5.79%

Tactical Asset Allocation Model Portfolio

The following portfolio is based on the MyPlanIQ Tactical Asset Allocation (TAA) strategy.

The return data shown below all delayed by 3 months. Their latest dates are all the same: 02/28/2025.
AR inception is since 12/31/2000.
Name YTD Return 1Yr AR 3Yr AR 5Yr AR 10Yr AR 15Yr AR 20Yr AR Inception
David Swensen Six Asset Individual Investor Plan Tactical Asset Allocation Moderate 0.85% 7.65% 3.90% 7.52% 6.07% 7.97% 9.08% 9.78%
VFINX (VANGUARD 500 INDEX FUND INVESTOR SHARES) 1.42% 18.88% 12.39% 16.78% 12.80% 13.83% 10.34% 8.54%
VSMGX (VANGUARD LIFESTRATEGY MODERATE GROWTH FUND INVESTOR SHARES) 2.49% 11.09% 5.14% 7.38% 6.01% 7.04% 5.95% 5.67%

Asset Allocation Composite Model Portfolio

The following model portfolio is based on the MyPlanIQ Asset Allocation Composite (AAC) strategy.

The return data shown below all delayed by 3 months. Their latest dates are all the same: 11/29/2024.
AR inception is since 12/31/2000.
Name YTD Return 1Yr AR 3Yr AR 5Yr AR 10Yr AR 15Yr AR 20Yr AR Inception
David Swensen Six Asset Individual Investor Plan Asset Allocation Composite Moderate NA 15.67% 0.86% 5.49% 5.30% 6.43% 7.11% 8.21%
VFINX (VANGUARD 500 INDEX FUND INVESTOR SHARES) NA 34.25% 10.57% 15.70% 13.31% 14.08% 10.54% 8.97%
VSMGX (VANGUARD LIFESTRATEGY MODERATE GROWTH FUND INVESTOR SHARES) NA 18.09% 3.51% 6.88% 6.22% 7.13% 6.08% 5.92%

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