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Larry Swedroe Eliminate Fat Tails Portfolio
0.28%June 04 | MyPlanIQ portfolio symbol P_79055

  • Portfolio Overview
  • Asset Allocation and ETFs
  • Performance
  • Calculators
  • Rolling Returns
  • Drawdowns

Portfolio Overview


Larry Swedroe Eliminate Fat Tails Portfolio: Overview

1. Background and Philosophy

The Larry Swedroe Eliminate Fat Tails Portfolio is designed by Larry Swedroe, a renowned financial author, researcher, and principal at Buckingham Strategic Wealth. Swedroe is a proponent of evidence-based investing, emphasizing low-cost, passive strategies that minimize risk and maximize long-term returns. This portfolio reflects his focus on reducing tail risk (extreme market downturns) by combining equities with high-quality bonds and inflation-protected securities.

2. Asset Allocation Analysis

The portfolio is structured as follows:

  • 15% EEM (iShares MSCI Emerging Markets ETF): Provides exposure to emerging market equities, offering growth potential but higher volatility.
  • 15% IJR (iShares Core S&P Small-Cap ETF): Focuses on U.S. small-cap stocks, which historically outperform large caps over long periods but are riskier.
  • 35% BIL (SPDR Bloomberg 1-3 Month T-Bill ETF): Allocates to ultra-short-term Treasury bills, providing liquidity and stability.
  • 35% TIP (iShares TIPS Bond ETF): Invests in Treasury Inflation-Protected Securities (TIPS), hedging against inflation.

Diversification and Risk

The portfolio is highly diversified across equities (U.S. small caps and emerging markets) and bonds (short-term Treasuries and TIPS). However, its risk level is moderate to high due to the significant equity exposure (30%) and the volatility of small-cap and emerging market stocks. The bond allocation (70%) mitigates some risk but leans toward shorter durations, which may underperform in falling rate environments.

Pros and Cons

Pros:

  • Inflation protection via TIPS.
  • Low correlation between asset classes reduces tail risk.
  • Low-cost ETFs align with passive investing principles.

Cons:

  • Limited growth potential due to heavy bond allocation.
  • Emerging market and small-cap risks can lead to volatility.
  • No exposure to large-cap U.S. or international developed markets, which may limit diversification.

3. Practical Application in Retirement Accounts

For 401(k) Accounts:

Investors should:

  1. Identify comparable funds in their 401(k) plan:
    • Replace EEM with an emerging markets stock fund or a broad international equity fund.
    • Replace IJR with a U.S. small-cap index fund or a Russell 2000 fund.
    • Replace BIL with a short-term bond fund or money market fund.
    • Replace TIP with a TIPS fund or inflation-protected bond fund.
  2. If a specific holding is unavailable, allocate to the closest broader asset class (e.g., substitute missing TIPS with a total bond market fund).
  3. Since commodities are rare in 401(k)s, any such allocation should be redirected to stocks or bonds.

For IRA Accounts:

Investors can directly purchase the ETFs listed in the portfolio, as IRAs offer greater flexibility. Rebalance annually to maintain the target allocations.

Click here for more portfolio details and features ►

Asset Allocation


Symbol Category/Sector Target Weight
EEM
iShares MSCI Emerging Markets ETF 		International Equity 15%
IJR
iShares Core S&P Small Cap ETF 		US Equity 15%
BIL
SPDR Bloomberg 1-3 Month T-Bill ETF 		Fixed Income 35%
TIP
iShares TIPS Bond ETF 		Fixed Income 35%


Historical Performance


Larry Swedroe Eliminate Fat Tails Portfolio Historical Returns

Name YTD Return 1Yr AR 3Yr AR 5Yr AR 10Yr AR 15Yr AR 20Yr AR Inception
Larry Swedroe Eliminate Fat Tails Portfolio 2.34% 5.51% 3.15% 4.34% 3.67% 3.92% NA 3.73%
VFINX (VANGUARD 500 INDEX FUND INVESTOR SHARES) 2.03% 14.20% 14.72% 15.60% 12.92% 14.19% 10.37% 9.87%
VSMGX (VANGUARD LIFESTRATEGY MODERATE GROWTH FUND INVESTOR SHARES) 5.23% 10.75% 8.37% 7.42% 6.31% 7.36% 6.07% 5.35%
Data as of 06/04/2025, AR inception is 05/30/2007

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Larry Swedroe Eliminate Fat Tails Portfolio Historical Return Chart


Calculators


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Rolling Returns


From 05/30/2007 to 06/04/2025, the worst annualized return of 3-year rolling returns for Larry Swedroe Eliminate Fat Tails Portfolio is -0.56%.
From 05/30/2007 to 06/04/2025, the worst annualized return of 5-year rolling returns for Larry Swedroe Eliminate Fat Tails Portfolio is 1.56%.
From 05/30/2007 to 06/04/2025, the worst annualized return of 10-year rolling returns for Larry Swedroe Eliminate Fat Tails Portfolio is 2.52%.

Maximum Drawdown

Larry Swedroe Eliminate Fat Tails Portfolio Maximum Drawdown