Has anybody analyzed the various lazy investment portfolios

[FinanceGeek]

Probably everyone who follows passive investing is aware of the various commentators who've published model "lazy" portfolios, these portfolios are usually composed of a blend of various ETFs, Vanguard funds, or DFA funds. A few names which come to mind who have published such portfolios include Paul Farrell, Paul Merriman, Ben Stein, Jim Lowell, Bill Shultheis, Roger Nusbaum, and probably a few others I haven't at hand right now.

Has anybody ever sat down and analyzed any of these portfolios to see how they have performed historically (by "performed" I mean not just the basic measures of return and volatility, but also MPT measures such as alpha, Sharpe ratio, Treynor ratio, etc.)?

I realize this post might sound like not only am I looking to invest in a lazy portfolio, but I'm even too lazy to analyze the various ones that have already been published. Actually that's not (entirely) the case, the fact is I am a very LBYM type, and my portfolio is not yet of the size to justify purchasing the professional portfolio management software (e.g. Captools et. al) to do this kind of analysis - and wonder if others may have done it already.

 

[wildcat]

AssetBuilder, Inc.

Scott Burns covers some of his lazy portfolios here. Unfortunately, none really go back far. I am sure the data is in the books if you care to slog through several hundred pages.

If I had to pull a volatility number out of my head, I would say they compare well to balanced funds with a bit more on the return side.

'Lazy' portfolios beat benchmarks again; here are top performers - MarketWatch

Another good link that compares/contrasts lazy portfolios and includes returns but only up to 5 years.

 

[Olav23]

The kirk report blog has many more of the lazy ports. He doesn't run the numbers, but it is a nice collection of many of them.

The Kirk Report : Lazy Portfolio Archives

 

[Mach]

Isn't an index fund the easiest lazy approach? No significant research required.

-Mach

 

[Webzter]

Isn't an index fund the easiest lazy approach? No significant research required.

-Mach

Remember, asset allocation is about risk management. Different assets have different risks and rewards associated with them. A large part of asset allocation is still about choosing the right mix. For us truly passive, don't want to look at it investors (Buffet's know-nothing investors), something like one of the lifestyle funds from Vanguard would probably fit the bill.

The point of a passive index fund v. an active fund is the hypothesis that an active manager, over the long haul, can do no better than the market. And, if that's the case, the fund's overhead will cause you do to much worse than the market.

That said, we all know that an REIT fund will have a different risk/return than a total stock market (not to mention, in that case, a low correlation, which may also be important to some people). And, a small / value stock fund will have different risk / return than a large cap (in that case, potential risk premia may be more valuable to one investor than the other).

But, in principal, I would agree with you. I would (have) just pick an allocation along the lines of Rick Ferri in All About Asset Allocation or one of the model portfolios at Fund Advice and call it good.

Reallocate ever 12-18 months to bring things back in line with your planned allocation percentages and call it good. Total time spent, 2 hours to learn and another 5 minutes to rebalance every year and a half.

 

[Mach]

Remember, asset allocation is about risk management. Different assets have different risks and rewards associated with them. A large part of asset allocation is still about choosing the right mix. For us truly passive, don't want to look at it investors (Buffet's know-nothing investors), something like one of the lifestyle funds from Vanguard would probably fit the bill.

True, those are even more passive.

The new "freedom funds" or the like, that move from mostly stocks at X years before retirement, then slowly move to more stable/lower return as you near retirement, are even more lazy, and seem to be widely available now with the big fund managers.

I'd like to see absolute laziness realistically though. The potential loss in efficiency from a 100% passive investment portfolio vs the extra time you have to work to reach your goal. After all, working is the opposite of lazy/passive for many of us. But I understand that even if one has nothing to do, learning about investing may still be completely off the table. There is an optimal lazy approach, it's finding it that's not lazy

-Mach

 

[FinanceGeek]

Isn't an index fund the easiest lazy approach? No significant research required.

-Mach

You are correct, the so-called "lazy portfolios" I'm speaking of are generally a basket of various index funds with a mix of equities and fixed income allocation.

As an aside what software would one want to buy to best analyze portfolios retrospectively? I'm familiar with captools, but its way out of my league as an individual investor. Retail tools like MSMoney and Quicken are best seen as "balance your checkbook" tools, and seem underpowered for historical analysis. Any thoughts on what else is out there?