P David Swensen Yale Individual Investor Portfolio Annual Rebalancing
0.60%May 16 | MyPlanIQ portfolio symbol P_407

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

Portfolio Overview


Background and Philosophy

David Swensen (the longtime Yale Endowment CIO) proposed this "one size fits all" model for individual investors in his book Unconventional Success: A Fundamental Approach to Personal Investment. Unlike many conventional models, this one leaned heavily into global diversification --- not just U.S. and developed international, but also emerging markets and real estate. The big missing piece? Commodities. Which is kind of interesting, since many other diversified portfolios include them as an inflation hedge. But Swensen didn't like commodities for individuals. Instead, he leaned into TIPS and REITs for inflation protection.

One small side note that tends to confuse people: Swensen talked about rebalancing. He said that Yale did it daily, and by his estimate, that added maybe 1% or 2% in extra return versus annual rebalancing. But for individual investors, the assumption is annual rebalance. And that's fine.

Also worth noting --- he made a strong comment in the book that long-term Treasury bonds were the best diversifier: "The purity of noncallable, long-term, default-free Treasury bonds provides the most powerful diversification." That's a pretty strong endorsement. But later, someone claimed he clarified (in a Morningstar forum post reply) that average duration Treasuries were fine. So it's still unclear. We'll stick with long-term Treasuries here, but just be aware that there's some ambiguity.

Swensen's core ideas are:

  • Diversify across uncorrelated assets.
  • Stay equity-heavy for long-term growth (roughly 70/30 stocks to bonds).
  • Use TIPS and REITs to hedge against inflation.
  • Don't bother with commodities or gold.

It's not flashy. But there's logic behind each part.

Asset Allocation Analysis

Here's what the portfolio actually looks like, broken down by fund:

  • 30% VTSMX -- U.S. Total Stock Market
  • 20% VGSIX -- REITs
  • 20% International Stocks: Either
    • 20% VGTSX (Total International), or
    • 15% VGTSX + 5% VEIEX (Emerging Markets)
  • 15% VIPSX -- TIPS
  • 15% VUSTX -- Long-Term Treasuries

Pros

Diversification is strong. You're spread across U.S. and international stocks, real estate, and two different kinds of bonds (one focused on inflation protection, the other on deflation or flight-to-safety scenarios). The REIT and TIPS combo makes it pretty inflation resilient too. And the simplicity is hard to beat. Five or six funds total. Easy to manage.

Cons

It's still 70% equities, so it's not low-volatility. That might feel like too much if you're closer to retirement or just naturally risk-averse. Also, no commodities. That could hurt if we enter a long commodity bull cycle. Lastly, long-term Treasuries (VUSTX) come with interest rate risk --- when rates rise, they can fall fast. So this piece helps with crisis periods but may hurt in rising rate environments.

Practical Application in Retirement Accounts

In a 401(k)

Step 1: Look at what's available

  • U.S. Stocks: Use a total market fund or just an S&P 500 index fund like VFIAX.
  • International: A total international or a combo of developed and emerging markets.
  • REITs: If there's a real estate fund, great. If not, maybe use an equity income fund as a stand-in.
  • TIPS: Look for an inflation-protected bond fund.
  • Treasuries: If there's no long-term Treasury fund, use intermediate-term.

Step 2: Adjust if something's missing

  • No REITs? Just bump up U.S. or international stocks.
  • No TIPS? Increase your allocation to Treasuries or use a general bond fund.

Rule of thumb for selecting funds:

  • For stock exposure, prioritize index funds --- low-cost ones.
  • For bond exposure, look for core bond funds or, if available, high-quality actively managed total return bond funds. You can always browse MyPlanIQ's bond fund guide to find good options.

In a brokerage IRA

This is the easiest setup. You can use Vanguard's original mutual funds, or their ETF versions:

  • VTI instead of VTSMX
  • VNQ instead of VGSIX
  • VXUS or a mix of VEA + VWO instead of VGTSX/VEIEX
  • TIP for TIPS
  • VGLT for long-term Treasuries

Rebalancing?

Swensen recommended annual rebalancing. Some folks argue that quarterly is better --- and maybe it reduces volatility a little. Maybe. But to be honest, annual is more than enough for most people. Simpler. Less temptation to tinker. And let's face it --- tinkering is where most people go wrong.

Taxable Accounts

This portfolio isn't bad in a taxable setting, especially if you stick to ETFs. VTI, VXUS, and even TIP are relatively tax efficient. VNQ and the bond funds might throw off more taxable income, so you may want to keep those in an IRA or 401(k) if you can. That's basic asset location.

Also worth mentioning: tax-loss harvesting. You can harvest losses on VTI and swap into something like SCHB or ITOT. Just keep in mind the 30-day wash sale rule. Most brokers help with that now.

Final Thoughts

Swensen's lazy portfolio is one of the best well known lazy portfolios that have attracted large following. The diversification into REITs and TIPs is unique when it was first proposed. It's been well time tested and a good choice to follow, whether it's in your retirement 401(k) accounts or taxable investment accounts.

Click here for more portfolio details and features ►

Asset Allocation


Symbol Category/Sector Target Weight
VTSMX
VANGUARD TOTAL STOCK MARKET INDEX FUND INVESTOR SHARES 		US Equity 30%
VGSIX
VANGUARD REIT INDEX FUND INVESTOR SHARES 		Real Estate 20%
VGTSX
VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND INVESTOR SHARES 		International Equity 20%
VIPSX
VANGUARD INFLATION-PROTECTED SECURITIES FUND INVESTOR SHARES 		Fixed Income 15%
VUSTX
VANGUARD LONG-TERM TREASURY FUND INVESTOR SHARES 		Fixed Income 15%


Historical Performance


The return data shown below all have the same latest date: 05/16/2025.
AR inception is since 12/31/2000.
Name YTD Return 1Yr AR 3Yr AR 5Yr AR 10Yr AR 15Yr AR 20Yr AR Inception
P David Swensen Yale Individual Investor Portfolio Annual Rebalancing 3.11% 7.71% 7.01% 7.92% 6.75% 8.21% 7.60% 7.78%
VFINX (VANGUARD 500 INDEX FUND INVESTOR SHARES) 1.76% 13.83% 15.73% 16.78% 12.73% 13.68% 10.51% 8.55%
VSMGX (VANGUARD LIFESTRATEGY MODERATE GROWTH FUND INVESTOR SHARES) 4.34% 9.39% 8.78% 8.19% 6.08% 7.05% 6.15% 5.75%

P David Swensen Yale Individual Investor Portfolio Annual Rebalancing Return Calculator

Calculate Performance

Start date (MM/dd/yyyy)

End date   (MM/dd/yyyy)

Calculators


Dollar Cost Average Calculator for P David Swensen Yale Individual Investor Portfolio Annual Rebalancing

Starting Amount:
Investment Length (years):
Investment Symbol:
Regular Investment Amount ($):
DCA Frequency:
Share on

Retirement Spending Calculator for P David Swensen Yale Individual Investor Portfolio Annual Rebalancing

Starting Amount:
Period (Years):
Investment Portfolio or Fund:
Withdrawal Rate (%) :
%
Withdrawal Frequency:
Share on

Rolling Returns


From 12/31/2000 to 05/16/2025, the worst annualized return of 3-year rolling returns for P David Swensen Yale Individual Investor Portfolio Annual Rebalancing is -9.62%.

From 12/31/2000 to 05/16/2025, the worst annualized return of 5-year rolling returns for P David Swensen Yale Individual Investor Portfolio Annual Rebalancing is -1.18%.

From 12/31/2000 to 05/16/2025, the worst annualized return of 10-year rolling returns for P David Swensen Yale Individual Investor Portfolio Annual Rebalancing is 5.82%.


Maximum Drawdown

P David Swensen Yale Individual Investor Portfolio Annual Rebalancing Maximum Drawdown