The following table lists 2015 total returns for various examples of “lazy portfolios”.
Some of the portfolios (Coffeehouse and Coward’s) are designed as 60/40 stock/bond portfolios. Other portfolios (Ideal and Swensen) are designed as 70/30 stock/bond portfolios. The two-fund, three-fund, and four-fund portfolios are scaled to similar stock/bond allocations. The returns are derived from investments in investor share class Vanguard index funds. Lower cost admiral share class funds would add approximately +0.10% to returns. Detailed descriptions of each portfolio’s annual returns are linked.
2015 total return
| Portfolio | 60/40 | 70/30 |
|---|---|---|
| Two-fund | -1.09% | -1.32% |
| Three-fund | -0.79% | -0.97% |
| Ferri Core four | -0.43% | -0.55% |
| Vanguard Core four | -0.74% | -0.95% |
| Coffeehouse | -0.93% | – |
| Coward’s | -0.82% | – |
| Ideal | – | -1.55% |
| Swensen | – | -0.34% |
While the stock/bond allocations of the portfolio’s are similar, sub asset class allocations differ, accounting for difference in returns. The stock allocation differences include:
- Value tilts: The Coffeehouse, Coward’s, and Ideal portfolios employ value tilts to the US stock portfolio allocation. In 2015 value stocks under performed growth stocks.
- REITs: The Ferri Core Four, Coffeehouse, Cowards, Ideal, and Swensen portfolios include an allocation to equity REIT index funds. In 2015 equity REITS slightly out performed the overall US market.
- International stocks: Each of the portfolios include international stocks, but with differing allocation ranges. In 2015 international stocks under performed US stocks.
Bond allocation differences include:
- Bond maturities: The Coward’s and Ideal portfolios employ short-term bonds in the bond allocation. All other portfolios use intermediate-term bonds. In 2015 short-term bonds slightly out-performed intermediate-term bonds.
- International bonds: The Vanguard four-fund portfolio has an allocation to hedged international bonds. All other portfolios invest in US bonds. In 2015 international bonds slightly outperformed US bonds.
- Inflation-indexed bonds: The Swensen portfolio is the only portfolio with an allocation to US inflation-indexed treasury bonds. In 2015 US inflation-indexed bonds slightly under performed US nominal bonds.
2015 asset class benchmark index returns:
- CRSP Total US market: +0.40%
- CRSP US Value: -0.86%
- CRSP US Small: -3.68%
- CRSP US Small Value: -4.64%
- US REITS: + 2.22%
- FTSE Global All Cap ex US Index: –4.29%
- US Barclays Aggregate: +0.44%
- US Barclays 1-5: +0.97%
- Barclays US Trsy Inflat Prtcd Index: –1.44%
- Barclays Global Aggregate ex-USD hedged: + 1.34%
Historical returns
The following tables provide historical portfolio returns. Keep in mind that past performance does not predict future performance.
The coefficient of variation statistic is a simple measure of risk adjusted return (standard deviation divided by the mean return.) The the lower the ratio of standard deviation to mean return, the better your risk-return trade off.
60/40 allocation portfolios
Compound return
| Portfolio | 3yr | 5yr | 10yr | 15yr |
|---|---|---|---|---|
| Two-fund | 5.29% | 5.69% | – | – |
| Three-fund | 7.05% | 6.67% | 5.99% | 5.52% |
| Ferri Core four | 6.95% | 6.73% | 6.06% | 6.62% |
| Coffeehouse | 7.56% | 7.29% | 6.34% | 6.73% |
| Coward’s | 6.97% | 6.27% | 5.60% | 6.30% |
Standard deviation
| Portfolio | 3yr | 5yr | 10yr | 15yr |
|---|---|---|---|---|
| Two-fund | 6.96% | 6.89% | – | – |
| Three-fund | 8.31% | 7.05% | 11.82% | 11.54% |
| Ferri Core four | 7.22% | 6.32% | 11.79% | 11.34% |
| Coffeehouse | 8.02% | 6.67% | 11.74% | 11.16% |
| Coward’s | 8.43% | 7.64% | 13.46% | 12.21% |
Coefficient of variation
| Portfolio | 3yr | 5yr | 10yr | 15yr |
|---|---|---|---|---|
| Two-fund | 1.28 | 1.30 | – | – |
| Three-fund | 1.14 | 1.03 | 1.76 | 1.88 |
| Ferri Core four | 1.01 | 0.92 | 1.75 | 1.74 |
| Coffeehouse | 1.03 | 0.90 | 1.68 | 1.53 |
| Coward’s | 0.97 | 0.97 | 1.75 | 1.74 |
70/30 allocation portfolios
Compound return
| Portfolio | 3yr | 5yr | 10yr | 15yr |
|---|---|---|---|---|
| Two-fund | 5.92% | 5.42% | – | – |
| Three-fund | 7.96% | 7.22% | 6.10% | 5.51% |
| Ferri Core four | 7.86% | 7.29% | 6.48% | 7.06% |
| Ideal | 6.04% | 5.41% | 5.37% | 5.92% |
| Swensen | 7.04% | 7.39% | 6.46% | 7.12% |
Standard deviation
| Portfolio | 3yr | 5yr | 10yr | 15yr |
|---|---|---|---|---|
| Two-fund | 8.42% | 8.35% | – | – |
| Three-fund | 9.96% | 8.54% | 13.90% | 13.63% |
| Ferri Core four | 8.60% | 7.64% | 13.81% | 13.39% |
| Ideal | 8.71% | 8.41% | 14.25% | 13.73% |
| Swensen | 6.55% | 6.04% | 13.70% | 12.96% |
Coefficient of variation
| Portfolio | 3yr | 5yr | 10yr | 15yr |
|---|---|---|---|---|
| Two-fund | 1.37 | 1.47 | – | – |
| Three-fund | 1.14 | 1.03 | 1.78 | 1.88 |
| Ferri Core four | 1.06 | 1.02 | 1.94 | 1.97 |
| Ideal | 1.39 | 1.48 | 2.25 | 2.02 |
| Swensen | 1.05 | 0.95 | 1.95 | 1.70 |
Barry Barnitz, an administrator of the John C. Bogle Center for Financial Literacy site.
