Craig Israelsen’s 7Twelve Portfolio, Too Much Diversification?

Craig Israelsen’s 7Twelve Portfolio has exposed to 40% stocks 25% bonds and 35% alternatives including gold and REITs. It can be built with 12 ETFs. It is a medium risk portfolio.

For the past 10 years, the 7Twelve Portfolio has returned 5.54 with a standard deviation of 10.03. The dividend yield is 1.64%. The 30-year return is 7.96%. Year to date the 7Twelve Portfolio has returned 4.46%%.

What is the return of The 7Twelve Portfolio?

NameAsset class countYear to dateReturn in 202010 year returnCAGR since 1989 (%)Risk levelExpense ratio
7Twelve Portfolio124.46%8.215.547.9620.15%
7-Twelve Portfolio Age Based 50-60 by Craig Israelsen123.56%6.644.577.0220.15%
7-Twelve Portfolio Age Based 60-70 by Craig Israelsen122.67%
7-Twelve Portfolio Age Based 70 Plus by Craig Israelsen121.77%3.532.65.0210.15%

Here is how you build the 7Twelve portfolio with ETFs

  • 8.37%    US Large Cap (VV)
  • 8.33%    US Mid Cap (IJH)
  • 8.33%    US Small Cap (VIOO)
  • 8.33%    REITs (VNQ)
  • 8.33%    International Developed Blend (VEA)
  • 8.33%    Emerging Markets (VWO)
  • 8.33%    Total US Bond Market (BND)
  • 8.33%    Cash (money market fund) (BIL)
  • 8.33%    Commodities (DBC / GSG)
  • 8.33%    Gold (IAU)
  • 8.33%    TIPS (VTIP)
  • 8.33%    Non-US Bonds (BNDX)

You can find the rest of the 7Twelve portfolios below.

Who is Craig Israelsen?

Craig L. Israelsen, Ph.D., is an Executive-in-Residence in the Financial Planning Program at Utah Valley University. He developed the 7-Twelve portfolio to create a portfolio with massive diversification. In his book 7Twelve: A Diversified Investment Portfolio with a Plan, he lays out the portfolio. The portfolio consists of 7 asset classes and 12 funds (or ETFs) that invest in those asset classes.

Description of Craig Israelsen’s 7Twelve Portfolio

Although we tongue-in-cheek allude to the fact that the 7Twelve portfolios are over diversified we very much welcome diversification. William Bernstein has long since demonstrated that a well-diversified portfolio lowers your risk and may lead to higher returns.

You really can’t have too much diversification. Consider the Total Stock Market ETF from Vanguard (VTI). It holds some 300o companies. Now that’s diversification.

The problem with too much diversification is that you diversify into the wrong asset classes. The wrong asset classes are asset classes that depend more on speculation for its value to rise than human ingenuity and competition. Examples of these include investing in precious metals, wine, and most commodities.

7twelve portfolio asset allocation

Commodities have no intrinsic value and do not generate a steady stream of income like a real business.

The 7Twelve holds 8.33% in gold. It is a small allocation, but it could instead be directed towards a more productive set class. The counter-argument to this is that it is productive because it provides diversification in downtimes. But what good is a diversification that does not generate returns above inflation?

The real strength of the 7Twelve investment portfolio is that it has a low drawdown, while still providing decent returns.

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 The 7Twelve Portfolios


Below is a good commentary on the performance of the 7Twelve portfolio

The 7Twelve portfolio

  • 8.37%    US Large Cap (VV)
  • 8.33%    US Mid Cap (IJH)
  • 8.33%    US Small Cap (VIOO)
  • 8.33%    REITs (VNQ)
  • 8.33%    International Developed Blend (VEA)
  • 8.33%    Emerging Markets (VWO)
  • 8.33%    Total US Bond Market (BND)
  • 8.33%    Cash (money market fund) (BIL)
  • 8.33%    Commodities (DBC / GSG)
  • 8.33%    Gold (IAU)
  • 8.33%    TIPS (VTIP)
  • 8.33%    Non-US Bonds (BNDX)

7-Twelve Portfolio Age-Based 50-60 by Craig Israelsen  

  • 6.63%    US Large Cap (VV)
  • 6.67%    US Mid Cap (IJH)
  • 6.67%    US Small Cap (VIOO)
  • 6.67%    REIT (VNQ)
  • 6.67%    International Developed Blend (VEA)
  • 6.67%    Emerging Markets (VWO)
  • 6.67%    Total US Bond Market (BND)
  • 26.67%  Cash (money market fund) (BIL)
  • 6.67%    Commodities (DBC / GSG)
  • 6.67%    Gold (IAU)
  • 6.67%    TIPS (VTIP)
  • 6.67%    Non-US Bonds (BNDX)

7-Twelve Portfolio Age-Based 60-70 by Craig Israelsen  

  • 5.00%    US Large Cap (VV)
  • 5.00%    US Mid Cap (IJH)
  • 5.00%    US Small Cap (VIOO)
  • 5.00%    REIT (VNQ)
  • 5.00%    International Developed Blend (VEA)
  • 5.00%    Emerging Markets (VWO)
  • 5.00%    Total US Bond Market (BND)
  • 45.00%  Cash (money market fund) (BIL)
  • 5.00%    Commodities (DBC / GSG)
  • 5.00%    Gold (IAU)
  • 5.00%    TIPS (VTIP)
  • 5.00%    Non-US Bonds (BNDX)

7-Twelve Portfolio Age-Based 70 Plus by Craig Israelsen

  • 3.37%    US Large Cap      (VV)
  • 3.33%    US Mid Cap         (IJH)
  • 3.33%    US Small Cap      (VIOO)
  • 3.33%    REIT       (VNQ)
  • 3.33%    Int. Developed Blend      (VEA)
  • 3.33%    Emerging Markets           (VWO)
  • 3.33%    Total US Bond Market    (BND)
  • 63.33%  Cash (money market fund)          (BIL)
  • 3.33%    Commodities     (DBC / GSG)
  • 3.33%    Gold      (IAU)
  • 3.33%    TIPS       (VTIP)
  • 3.33%    Non-US Bonds   (BNDX)

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 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.

Advantages and disadvantages of  the 7Twelve Portfolio


  • The 7Twelve portfolios have great diversification, almost all known asset classes are included.
  • The 7Twelve investment portfolios have been constructed by one of the foremost experts in the retirement field.
  • You get significant diversification across many asset classes with the 7Twelve portfolios.
  • The 7Twelve investment portfolios are some of the few portfolios that have mid-cap stocks. The mid-cap stocks have outperformed large-cap stocks historically.
  • With these portfolios, you get excellent opportunities for rebalancing, thereby reducing risk and increasing returns.
  • The portfolios are easy to understand. There are 12 funds, and they are equal-weighted.


  • The portfolios may tilt too much towards natural resources and commodities (16%).
  • The portfolio may not be worth the trouble with so many funds to juggle around.
  • The portfolios can be overly expensive in commissions to rebalance because of the 12 funds. Commodity ETFs are also more expensive than stock and bond ETFs.
  • A bet on mid-cap stocks may not be what you want.
  • The portfolio may not perform as well as a simple 3-fund portfolio.

Resources for the 7Twelve portfolios

Go here for the 7Twelve site. It’s excellent with many tables and articles by Craig Israelsen.

Craig Israelsen regularly publishes content on the 7Twelve strategy. You can find his library here.

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

Related questions

What is the All-Weather portfolio?
The All-Weather portfolio is built by Ray Dalio and Tony Robbins. It has 30% stocks, 55% bonds, and 15% alternatives.

What is a lazy portfolio?
A lazy portfolio is a portfolio that requires little maintenance and is easy to build. The Couch Potato portfolio is an example of a lazy portfolio.

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