Meb Faber Portfolios, Backed By Solid Research

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The Meb Fabers Global Asset Allocation (GAA) portfolio is composed of 50% equities and 50% bonds. It is a low-risk portfolio. It is also exposed to gold and commodities.

For the past 10 years, Meb Faber’s Global Asset Allocation has returned 9.06% with a standard deviation of 15.43%. Last year it returned 24.15%. The dividend yield is 2.54%. The 30-year return is 9.53%. Year to date the Meb Faber’s Global Asset Allocation has returned -7.17.

Meb Faber has made several outstanding portfolios. You can, you can find ETF asset allocation as well as performance for the many portfolios Meb Faber has constructed further below.

What is the return of Meb Faber’s portfolios?

NameAsset class countYear to dateReturn in 201910 year returnCAGR since 1989 (%)Risk levelExpense ratio
Meb Faber Ivy 5 Portfolio5-9.7821.326.08%7.5430.22%
Meb Faber Ivy 10 Portfolio9-11.8620.085.33%7.9530.23%
Meb Faber Risk Parity Portfolio72.214.195.21%7.0110.14%
Meb Faber GTAA Conservative11-5.0918.066.09%8.4620.22%
Meb Faber GTAA Moderate11-9.7920.556.32%8.7730.26%
Meb Faber GAA100.5918.576.86%7.9510.14%
Meb Faber IVY 20 portfolio16-11.2620.385.78%8.330.29%

How do you build Meb Faber’s portfolios with ETFs?

Below you see the asset allocation for all of Meb Faber’s portfolios.

Meb Faber’s Global Asset Allocation Portfolio (GAA)

  • 18.00%  US Large Cap      (VV)
  • 4.50%    REITs     (VNQ)
  • 13.50%  International Developed Blend      (VEA)
  • 4.50%    Emerging Markets           (VWO)
  • 13.50%  Long Term Treasuries        (TLT)
  • 19.80%  Corporate Bonds              (LQD)
  • 5.00%    Commodities     (DBC / GSG)
  • 5.00%    Gold      (IAU)
  • 1.80%    TIPS       (VTIP)
  • 14.40%  Non-US Bonds   (BNDX)

Meb Faber’s Global Tactical Asset Allocation (GTAA) Conservative

  • 3.75%    US Large Cap Value         (VTV)
  • 3.75%    US Small Cap Value         (VIOV)
  • 15.00%  REITs     (VNQ)
  • 7.50%    International Developed Blend      (VEA)
  • 7.50%    Emerging Markets           (VWO)
  • 10.00%  Long Term Treasuries        (TLT)
  • 10.00%  Intermediate-Term Treasuries       (VGIT)
  • 10.00%  Corporate Bonds              (LQD)
  • 15.00%  Commodities     (DBC / GSG)
  • 10.00%  Non-US Bonds   (BNDX)
  • 7.50%    Momentum Factor          (MTUM)

Meb Faber’s Global Tactical Asset Allocation (GTAA) Moderate

  • 5.00%    US Large Cap Value         (VTV)
  • 5.00%    US Small Cap Value         (VIOV)
  • 20.00%  REITs     (VNQ)
  • 10.00%  International Developed Blend      (VEA)
  • 10.00%  Emerging Markets           (VWO)
  • 5.00%    Long Term Treasuries        (TLT)
  • 5.00%    Intermediate-Term Treasuries       (VGIT)
  • 5.00%    Corporate Bonds              (LQD)
  • 20.00%  Commodities     (DBC / GSG)
  • 5.00%    Non-US Bonds   (BNDX)
  • 10.00%  Momentum Factor          (MTUM)

Meb Faber’s Ivy 5 Portfolio

  • 20.00%  US Total Stock Market   (VTI)
  • 20.00%  REITs     (VNQ)
  • 20.00%  International Developed Blend      (VEA)
  • 20.00%  Total US Bond Market    (BND)
  • 20.00%  Commodities     (DBC / GSG)

Meb Faber’s Ivy 10 Portfolio

  • 10.00%  US Large Cap      (VV)
  • 10.00%  US Small Cap      (VIOO)
  • 10.00%  REITs     (VNQ)
  • 10.00%  International Developed Blend      (VEA)
  • 10.00%  Emerging Markets           (VWO)
  • 10.00%  Total US Bond Market    (BND)
  • 20.00%  Commodities     (DBC / GSG)
  • 10.00%  TIPS       (VTIP)
  • 10.00%  International REITs          (VNQI)

Meb Faber Ivy 20 portfolio

  • 5.00%    US Large Cap      (VV)
  • 5.00%    US Mid Cap         (IJH)
  • 5.00%    US Small Cap      (VIOO)
  • 5.00%    US Micro-Cap     (IWC)
  • 5.00%    REITs (Real Estate)           (VNQ)
  • 5.00%    Int. Developed Blend      (VEA)
  • 5.00%    Emerging Markets           (VWO)
  • 5.00%    Intl Sm Cap Blend             (VSS)
  • 5.00%    Total US Bond Market    (BND)
  • 5.00%    Timber (TREE)
  • 5.00%    Infrastructure
  • 5.00%  Commodities     (DBC / GSG)
  • 5.00%  Commodities     (DBC / GSG)
  • 5.00%  Commodities     (DBC / GSG)
  • 5.00%  Commodities     (DBC / GSG)
  • 5.00%    TIPS       (VTIP)
  • 5.00%    Non-US Bonds   (BNDX)
  • 5.00%    Emerging Markets Small Cap       (EWX)
  • 5.00%    Emerging Market Bonds (VWOB)
  • 5.00%    International REITs (Real Estate) (VNQI)

Meb Faber’s Risk Parity Portfolio

  • 7.50%    US Total Stock Market   (VTI)
  • 5.00%    REITs     (VNQ)
  • 7.50%    International All-World ex-US     (VEU)
  • 35.00%  Intermediate-Term Treasuries       (VGIT)
  • 35.00%  Corporate Bonds              (LQD)
  • 5.00%    Commodities     (DBC / GSG)
  • 5.00%    Gold      (IAU)

Who is Meb Faber?

Meb Faber (Mebane Faber) is a quant and productivity-meister galore who regularly backtests portfolios. In his fantastic book Global Asset Allocation: A Survey of the World’s Top Asset Allocation Strategies, he has collected a host of different portfolios playing on the same theme – well-diversified portfolios from some of the top money managers.

His paper on tactical asset allocation A Quantitative Approach to Tactical Asset Allocation has revived trend-following. It is a fantastic primer on how to implement trend following into your portfolio. Trend following is not designed to deliver market-beating returns but instead to mitigate risk while delivering market-like returns.

His book The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets shows how you can mirror the portfolios of the top-endowment funds like Yale and Harvard. You can check out our post Meb Faber’s Ivy 10 Portfolio: Expand And Conquer Yale And Harvard.

We love Meb Faber around here. This is because he is a numbers guy who doesn’t seem to fret about the small stuff in investing. He keeps his horizon long and his feet very close to reality. He is not afraid to call people out on bullshit or dubious claims. He just seems relaxed about investing, surfs (yay!), and enjoys talking about asset classes, investing, and all that jive.

In the video below Mebane Faber talks at Google.

We have gotten a lot of good ideas from Meb Faber’s writings.

Meb Faber is also a fan of trend following, which he calls his “desert island” strategy. We here at Portfolioeinstein.com are also fans of trend following as a diversifier and a mitigator of risk. We have an article lined up about just that.

Much of Meb Faber’s work is all about figuring out how others have done well. His books, articles, and podcast reflect this. His book Invest With The House: Hacking The Top Hedge Funds looked at hedge fund strategies and proposed ways to mirror them.

invest-with-the-house

What is unique about Meb Faber’s portfolios?

Meb Faber uses two strategies in his portfolios. They are either market timing strategies (trend following) or globally diversified portfolios which span many asset classes. We do not currently track his excellent trend following strategy.

Meb Faber also has a definite bias towards value and momentum asset classes. Both of those have done great historically.

Meb Faber’s Ivy 20, for example, makes use of 20 asset classes!

Here Mebane Faber talks about his Trinity portfolio.

Be sure to visit Meb Faber’s site.

His Ivy league portfolios featured in The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets are examples of his intent on broad diversification while keeping it simple. It is also a fantastic read by the way.

the-ivy-portfolio

Market Timing Meb

In his paper, A Quantitative Approach to Tactical Asset AllocationMeb Faber lays forward his tactical asset allocation. It may sound scary, but it is easily explained. It means that instead of having a buy-and-hold strategy like almost all of the portfolios on portfolioeinstein.com, the tactical portfolio changes its portfolio. In Meb Faber’s tactical asset allocation portfolio, the changes are determined by a 10-month average.

Example: If the price of S&P500 is above its 10-month average, you should buy an S&P500 ETF. If it is below the 10-month average, you should sell.

Mebane Faber uses more than one asset class in his tactical portfolio, however, and I suggest you read his paper. It is straightforward to understand without the usual academic jargon, so it should be accessible for most people.

One thing to remember about trend following is needed to underscore, which Meb Faber also stresses: Trend following is meant to decrease risk, not increase returns.

Meb Faber has included market timing in his most recent ETF offering – the Trinity portfolio ETF (TRTY).

Read Meb Faber’s paper on that here.

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.

Meb Faber portfolio resources

Be sure to visit the Meb Faber website, where he often posts.

His podcast is often of excellent quality. The first three are like a mini-course on investing!

Meb Faber has written some excellent books. One of their chief qualities is they are without any fluff or padding you usually see in these books.

Meb Faber is the CEO and CIO of Cambria Investments.

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 Ivy portfolio?
The Ivy portfolios are constructed by Meb Faber to mirror large endowments funds. It consists of these five or ten ETFs

  • 20.00% US Total Stock Market (VTI)
  • 20.00% International Developed Stocks (VEU)
  • 20.00% US Total Bond Market (BND)
  • 20.00% US REITs (VNQ)
  • 20.00% Commodities (DBC)

What is a world allocation fund?
It is an attempt to mirror the entire world’s asset allocation. It includes all the world’s investable assets. You can read and see which ETFs to use here.

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