Lazy Portfolios and ETF composition (2024)

FAQs

What is the asset allocation for a lazy portfolio? ›

Rick Ferri's Two-Fund Lazy Portfolio

The 60/40 rule of asset allocation is a tried-and-true rule of thumb for approaching your portfolio. And it's ludicrously simple: 60% stocks. 40% bonds.

"A newer investor with a modest portfolio may like the ease at which to acquire ETFs (trades like an equity) and the low-cost aspect of the investment. ETFs can provide an easy way to be diversified and as such, the investor may want to have 75% or more of the portfolio in ETFs."

The current David Swensen Lazy Portfolio Sharpe ratio is 1.06.

Research shows that passive investing strategies, like those employed in lazy portfolios, often outperform actively managed funds over the long term. The consistent returns of index funds make them a reliable choice for long-term growth.

Set aside 12 months of your expenses in liquid fund to take care of emergencies. Invest 20% of your investable surplus into gold, that generally has an inverse correlation with equity. Allocate the balance 80% of your investable surplus in a diversified equity portfolio.

It's relatively simple: You add up all of your investments, and withdraw 4% of that total during your first year of retirement. In subsequent years, you adjust the dollar amount you withdraw to account for inflation.

The 4% rule says people should withdraw 4% of their retirement funds in the first year after retiring and take that dollar amount, adjusted for inflation, every year after. The rule seeks to establish a steady and safe income stream that will meet a retiree's current and future financial needs.

This investment strategy seeks total return through exposure to a diversified portfolio of primarily equity, and to a lesser extent, fixed income asset classes with a target allocation of 70% equities and 30% fixed income. Target allocations can vary +/-5%.

A three-fund portfolio is an investment strategy that involves holding mutual funds or ETFs that invest in U.S. stocks, international stocks and bonds. The strategy is popular with followers of the late Vanguard founder John Bogle, who valued simplicity in investing and keeping investment costs low.

Usually, any Sharpe ratio greater than 1.0 is considered acceptable to good by investors. A ratio higher than 2.0 is rated as very good. A ratio of 3.0 or higher is considered excellent. A ratio under 1.0 is considered sub-optimal.

What is a good Treynor ratio? ›

There is no set level at which an investment becomes good or bad. Furthermore, the Treynor ratio is based on historical data. A lower Treynor ratio one year could become very good the next if volatility dies down or returns increase, or a high ratio could become worse.

Alpha of greater than zero means an investment outperformed, after adjusting for volatility. When hedge fund managers talk about high alpha, they're usually saying that their managers are good enough to outperform the market.

A typical asset allocation for a lazy portfolio would be about 60% US stocks, 20% international stocks and 20% bonds. If you want to be a little less lazy, you can get more creative with your fund choices.

It's important to note that both the 60/40 and 70/30 asset allocations are considered moderately risky. But the exact amount of risk you are comfortable with will depend on your specific needs and goals.

The only difference is that VTI's expense ratio is slightly lower at 0.03% compared with 0.04% for VTSAX. This is in alignment with other Vanguard comparisons, such as VOO versus VFIAX. The lower expense ratio gives VTI a slight edge in performance, especially for periods of less than 10 years.

Many financial advisors recommend a 60/40 asset allocation between stocks and fixed income to take advantage of growth while keeping up your defenses.

Key Takeaways. Once a mainstay of savvy investors, the 60/40 balanced portfolio no longer appears to be keeping up with today's market environment. Instead of allocating 60% broadly to stocks and 40% to bonds, many professionals now advocate for different weights and diversifying into even greater asset classes.

The Stocks/Bonds 80/20 Portfolio can be implemented with 2 ETFs. This portfolio has a very high risk, meaning it can experience significant fluctuations in value. It is suitable for investors with a high risk tolerance who are seeking substantial returns and can withstand large drawdowns.

Investors in their 20s, 30s and 40s all maintain about a 42% allocation of U.S. stocks and 8% allocation of international stocks in their financial portfolios. Investors in their 50s keep 39.7% in U.S. stocks and 8.4% in international stocks. Those in their 60s keep 36.4% and 7.8% respectively.