Brett Arends attempts to create the perfect portfolio

[karluk]

Interesting asset mix. It looks nothing like a traditional balanced portfolio, yet it clearly is reasonably well diversified. The article implies, but doesn't actually state, that Mr. Arends intends to use it for his own investments. I would find it quite ironic if he pulled a fast one and presented the portfolio to his readers as a viable alternative, but then backed out without putting any of his own money into it.

what is in this all-weather portfolio?

It’s 10% each in the following 10 asset classes:

U.S. “Minimum Volatility” stocks

International Developed “Minimum Volatility” stocks

Emerging Markets “Minimum Volatility” stocks

Global natural resource stocks

US Real Estate Investment Trusts

International Real Estate Investment Trusts

30-Year Zero Coupon Treasury bonds

30-Year TIPS

Global bonds

2-Year Treasury bonds (cash equivalent)

For simplicity’s sake, the portfolio I’ve modeled is rebalanced once a year, on Dec. 30.

Is this the perfect investment portfolio? - Brett Arends's ROI - MarketWatch

 

[CoolChange]

This actually seems like a reasonable portfolio to me.

In fact, I am currently researching ETF's and funds that would fit the Global natural resource stocks and Global bonds categories in this portfolio. It is probably another case of over-thinking: I have decided that I want exposure; now, I just need to buy something that fits even if it is not the absolute best vehicle available.

 

[karluk]

I also think the portfolio looks reasonable. I'm not expecting the members of this forum to blindly buy into this asset mix, but it definitely provides food for thought as to what asset classes are either missing or underrepresented in a traditional balanced portfolio.

 

[Animorph]

I've got the natural resources and U.S. and international REITs. I've got the U.S., international, and EM equities. I'm not sure I'd want to confine myself to all minimum volatility though. I skipped the bonds.

 

[LOL!]

So he gives a portfolio that one probably cannot buy. For himself, he will have to sequester away some ETFs or index funds that try to follow what he specified. I don't think they exist.

For instance, 'Emerging Markets “Minimum Volatility” stocks' is a delightfully oxymoronic phrase.

And his benchmarks are pretty bland and ignore the small-cap and value-tilted portfolios a lá Fama & French so often seen in the past 10 years or so.

 

[Animorph]

Here's one version of the equity side. Vanguard has at least one minimum volatility option as well:

USMV
EFAV
EEMV
GNR
VNQ
RWX

 

[Chuckanut]

Interesting portolio by Mr. Arends.

You could do worse. Much worse.

 

[samclem]

It's not something I'd consider for myself. Just 30% of "regular" equities is low (IMO) for the majority of people's situations, I'd guess. I know I don't want 20% RE. 30% bonds: If I were to hold that percentage of bonds long term, I think I'd want more than 1/3rd of 'em to be corporates.

But, it doesn't seem way extreme.

 

[bmcgonig]

I looked at the bond portion and chose ZROZ as the 30yr zero fund. Lord almighty it was down almost 30% last year. I guess when ur stocks are zigging this is zagging.