Dr. William Bernstein is the author of the “Intelligent Asset Allocator” and “The Four Pillars of Investing.” He’s also a physician, neurologist and financial adviser to high-net-worth individuals.
He has proposed two lazy portfolios
- The smart money portfolio
- The no-brainer portfolio
The smart money portfolio comprises the following fund allocation
- 40% in Vanguard Short Term Investment Grade VFSTX (SCJ, SHY)
- 15% in Vanguard Total Stock Market VTSMX (VTI)
- 10% in Vanguard Small Cap Value VISVX (VBR)
- 10% in Vanguard Value Index VIVAX (VTV)
- 5% in Vanguard Emerging Markets Stock VEIEX (VWO)
- 5% in Vanguard European Stock VEURX (VEU)
- 5% in Vanguard Pacific Stock VPACX (VPL)
- 5% in Vanguard REIT Index VGSIX (RWX, VNQ)
- 5% in Vanguard Small Cap Value NAESX or VTMSX (VB)
To summarize:
- 40% in US equities
- 10% in international equities
- 5% in emerging market equities
- 5% in REIT
- 40% in fixed income
Investment options of Bernstein Smart Money
Total Available Funds: 9
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Investment model portfolios
We provide two types of investment model portfolios for Bernstein Smart Money participants. You can customize and follow a model portfolio in your plan account.
Types of portfolio strategies
- Strategic asset allocation portfolio: It invests in a diversified portfolio of multiple assets, buy-and-hold without frequently changing the asset allocation weights.
- Suitable: For long-term (more than 15 years, preferably more than 20 years), want to be tax efficient and can withstand interim drawdown or loss as high as 50% or more.
- Pros:
- Less error-prone
- Infrequent rebalancing or transactions
- Tax efficient for taxable brokerage investments
- Cons:
- Interim loss or drawdown can be substantial
- Possible low returns for an extended period, such as 10 years or longer
- Tactical asset allocation portfolio: it invests in a diversified portfolio of multiple assets, dynamically adjust stock and bond allocations to minimize losses during market stress.
- Suitable: For long-term (more than 10 years or preferably longer) capital. Investors are willing to rebalance as frequent as monthly.
- Pros:
- Reduce large interim loss or drawdown
- Less sensitive to investment entry point
- Likely to improve returns
- Cons
- Demand more frequent rebalancing or transactions
- Less tax efficient — more suitable in a tax-deferred account such as 401(k) or IRA
- Can experience a period of lower returns compared to a broad-based strategic allocation or a buy-and-hold benchmark, especially in some bull markets
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.