Mohamed El-Erian Portfolio, Too Special?

Mohamad el-erian portfolio-png

The Mohamed El-Erian Portfolio can be built with 10 ETFs. It is exposed to 75% equities and 25% bonds. It is a high-risk portfolio. It is exposed to private equity and special situations.

For the past 10 years, The Mohamed El-Erian Portfolio has returned 6.14% with a standard deviation of 13.16%. Last year it returned 20.72%. The dividend yield is 2.32%. The 30-year return is 8.4%. Year to date the Mohamed El-Erian Portfolio has returned -0.11%.

Returns of Mohamed El-Erian’s portfolio

NameAsset class countYear to dateReturn in 201910 year returnCAGR since 1989 (%)Risk levelExpense ratio
Muhammad El-Erian Portfolio8-0.1120.726.14%8.430.17%

How to build the of the Mohamed El-Erian portfolio with ETFs

  • 15.00%  US Total Stock Market (VTI)
  • 15.00%  International Developed Blend (VEA)
  • 12.00%  Emerging Markets (VWO)
  • 7.00% Private Equity (using small-cap as proxy) (VIOO)
  • 5.00% Total US Bond Market (BND)
  • 9.00% International Bonds (BNDX)
  • 6.00% REITs (VNQ)
  • 11.00% Commodities (DBC / GSG)
  • 6.00% Long Term Treasuries (TLT)
  • 6.00% TIPS (VTIP)
  • 5.00% Infrastructure (using VTI US Total Stock Market as proxy)
  • 8.00% Special Opportunities (using small-cap as proxy)

Check the best mutual funds and ETFs here.

If you want to replicate the portfolio in another way you can use the following ETFs for the special asset classes:

when-market-collide-Muhammad El-Erian-asset-allocation
From When Markets Collide” by Mohamed El-Erian, page 198.

Who is Mohamed El-Erian?

Mohamed El-Erian is the former CEO of the PIMCO. PIMCO has $1.88 Trillion under management. He is also a veteran of the International Monetary Fund (IMF). In El-Erian’s book When Markets Collide: Investment Strategies for the Age of Global Economic Change, he presents a shock-absorbent long-term portfolio. He is often attributed to coming up with the expression “new normal” in the post-financial crisis.

Mohamed El-Erian is often interviewed on macro-economics issues. That is his specialty. So it should be interesting to see if he can translate his macroscopic perspective into a viable portfolio.

Description of the Mohamed El-Erian portfolio

The portfolio of Mohamed El-Erian portfolio is characterized by having some asset classes we don’t usually see in private portfolios but only in institutional portfolios and sovereign wealth funds. The biggest problem is the allocation of special opportunities. Special opportunities is a broad term. It, more often than not, covers mergers and acquisitions. See this Zacks article for more.  It explains to some degree what special situations include. There has begun to pop up ETFs that cover this area, but unfortunately, we do not have a long benchmarking history of these ETFs to get a good picture. Therefore we cannot use them to benchmark the portfolio going back to 1989 as we have done with other portfolios.

We have noted which asset classes we use instead of the “problematic” allocations.

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 Mohamed El-Erian portfolio

You can find his book When Markets Collide: Investment Strategies for the Age of Global Economic Change on Amazon, voted best business book by the Financial Times and Goldman Sachs in 2008.

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

How old is Mohamed El-Erian?
Mohamed El-Erian is 61 years old (19. august 1958)

Which portfolio is similar to Mohamed El-Erian’s?
Meb Faber’s Ivy 10 portfolio is most like Mohamed El-Erian’s. They both have commodities and the most popular asset classes.

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