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Charles Ellis is a giant in the investment community. He is the epitome of a gentleman.
We go through his investment portfolios, and you can find a description of Charles D. Ellis’ investment portfolio. You can also find the performance of his portfolios, and you can find out how you can implement them yourself.
- Charles Ellis investment portfolio, the gentleman giant
- Charles D. Ellis as an author
- Description of Charles D. Ellis’ investment portfolios
- Performance of Charles D. Ellis’ investment portfolios
- One more book I want to highlight
- Building the portfolio(s)
- Asset Allocation for Charles D. Ellis’ investment portfolios
- How we select the right ETFs
- Resources for the Charles D. Ellis’ investment portfolios
- Suggestions for your next steps
Charles Ellis investment portfolio, the gentleman giant
Charles D. Ellis, born in 1937, has had a noteworthy career.
- He worked in the Rockefeller family investment office.
- He worked in the investment bank of Donaldson, Lufkin & Jenrette.
- Founded Greenwich Associates in 1972. It is an investment analytics company.
- Taught investment management at Harvard Business School in 1970 and 1974
- Charles Ellis taught investment management at the Yale School of Management in 1986.
- He was a successor as trustee of Yale University’s endowment fund from 1997 to 2008, where he was working alongside David Swensen, who is also a legend.
- Charles D. Ellis was the chair of the board of the Institute of Chartered Financial Analysts (CFA). CFA is the most prestigious investing designation you can get.
- He was a director of the Vanguard Group from 2001 to 2009.
- Charles Ellis is currently on the advisory boards of Wealthfront and Rebalance.
With over 50 years of investing experience, Charles D. Ellis knows how to invest.
The investment management business (it should be a profession but is not) is built upon a simple and basic belief: Professional money managers can beat the market. That premise appears to be false.
– Charles D. Ellis
Charles D. Ellis has written one of the most famous investment books of all time:
It is outstanding.
The last half of the book caters more to investment professionals as it goes deep into how to construct an investment policy and so on. The book is a continuation of his article “The Loser’s Game” which appeared in the Financial Analyst Journal.
His book Winning The Loser’s Game is part of the canon of investing literature, in my opinion.
How can institutional investors hope to outperform the market… when, in effect, they are the market?”
– Charles D. Ellis
Charles D. Ellis has written 16 books.
Together with co-investing giant Burton Malkiel, he authored another fantastic book which is called The Elements of Investing, Easy Lessons for Every Investor.
It is practical, relevant, and offers much concrete advice on how to navigate the investing landscape.
Charles D. Ellis is a pleasure to listen to as he is always extremely eloquent, highly intelligent, and, as Barry Ritholz said in an interview, “he is the perfect gentleman.”
Description of Charles D. Ellis’ investment portfolios
The investment portfolios of Charles D. Ellis comes from his book The Elements of Investing, Easy Lessons for Every Investor. In that book, both Burton Malkiel and Charles Ellis offer their recommendation on how to construct a portfolio.
The portfolios of Charles Ellis are no surprise when you are aware of his investing conviction. I know of only one other person with such a strong belief in simplifying your investment strategy, and that is John C. Bogle.
“successful firms do flourish by holding fast to fundamental values: sticking to the right path; taking the long-term view; and insisting always on quality and excellence.”
– Charles D. Ellis
Charles Ellis does not think you can beat the market. It is a loser’s game to think that you can. It is best to diversify as much as you can.
For this reason, his portfolios are constructed using only two asset classes:
- Total World Market Stocks
- Total US Bond Market
Charles Ellis’ portfolio recommendation is based on your age. The older you are, the more bonds you should have in your portfolio, according to Charles Ellis. This is the standard approach in investing and is mirrored by many others like John Bogle.
Let’s see the performance of Charles Ellis’ portfolios
Performance of Charles D. Ellis’ investment portfolios
|Name||Asset class count||Year to date||Return in 2019||10 year return||CAGR since 1989 (%)||Risk level||Expense ratio|
|Charles Ellis Portfolio Under 40 Years Old||1||-2.75||26.79||9.04%||7.52||3||0.08%|
|Charles Ellis Portfolio 40 - 50 Years Old||2||-1.78||24.99||8.57%||7.55||3||0.08%|
|Charles Ellis Portfolio 50 - 60 Years Old||2||-0.82||23.18||8.09%||7.53||3||0.07%|
|Charles Ellis Portfolio 60 - 70 Years Old||2||1.11||19.56||7.07%||7.37||2||0.06%|
|Charles Ellis Portfolio 70 - 80 Years Old||2||2.08||17.75||6.55%||7.23||2||0.06%|
One more book I want to highlight
There is one more book that I want to highlight before we turn to the asset allocation. It is a relatively new book by Ellis: and it is called The Index Revolution and is from 2016. It is a fantastic summary of the thinking of Charles Ellis combined with investing wisdom. It is forwarded by his long time friend and collaborator Burton Malkiel.
Building the portfolio(s)
Below you can see the asset allocations for the portfolio(s). You can also see if the portfolio(s) has a socially responsible investing (ESG) variant portfolio. You can read more about socially responsible investing (ESG) investment portfolios in this post.
To build the portfolio(s) yourself, go to our best in class ETF page to see which ETF you should choose for a particular asset class. There you can also see which socially responsible investing ESG ETFs you should select.
Asset Allocation for Charles D. Ellis’ investment portfolios
|Name||Total World Stocks||Total Bond Market|
|Charles Ellis Portfolio Under 40 Years Old||100.00%|
|Charles Ellis Portfolio 40 - 50 Years Old||90.00%||10.00%|
|Charles Ellis Portfolio 50 - 60 Years Old||80.00%||20.00%|
|Charles Ellis Portfolio 60 - 70 Years Old||60.00%||40.00%|
|Charles Ellis Portfolio 70 - 80 Years Old||50.00%||50.00%|
How we select the right ETFs
There are a lot of ETFs out there. Most of them can be discarded because:
- They are too expensive
- They hold too few assets and are therefore too illiquid
- They do not meet the criteria for representing the asset class they are supposed to mirror.
We have carefully selected an ETF for each asset class that the portfolios on portfolioeinstein.com use. If you want to read more about our selection process and see what we consider the best ETFs please visit our article What Is The Best ETF?
If you are a European investor you need to buy European ETFs. We list 47 best ETFs in our article What Are The Best ETFs For European Investors? (Here Is 47).
As of 2020 we also track socially responsible investing ESG portfolios. Socially responsible investing (ESG) portfolios prioritize investing that puts an emphasis on environmental, social and corporate governance issues.
You can find the socially responsible investing ESG ETFs in the same article.
Resources for the Charles D. Ellis’ investment portfolios
Go here for the first interview that Barry Ritholz did with Charles Ellis on his Master in Business podcast from Bloomberg.
Go here for the second interview that Barry Ritholz did with Charles Ellis on his Master in Business podcast from Bloomberg.
The best and most famous book by Charles Ellis is Winning the Loser’s Game, Seventh Edition: Timeless Strategies for Successful Investing, but he has written many more.
Suggestions for your next steps
Finding the correct portfolio is hard. Maintaining your portfolio is also daunting. If you are still in doubt about which portfolio to choose, we suggest you read our article How To Invest Money: 5 Simple Steps That Work For Anyone
If you have already committed to a portfolio – good for you! If you need help maintaining the portfolio you will find our rebalance worksheet useful. Rebalancing your portfolio lowers your risk and may even provide higher returns in the long run.
You can find the rebalance worksheet in our article Here Is The Most Easy To Use Portfolio Rebalance Tool
The portfolios of Charles Ellis makes a lot of sense if you buy into his arguments.
His portfolios are simple and easy to implement and probably provide some of the broadest diversification of any portfolios on portfolioeinstein.com.