Build Bogleheads Three Fund Portfolio With ETFs
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What is Rob Arnott’s portfolio?
Rob Arnotts Portfolio is exposed to 30% stocks, 60% bonds, and 10% commodities. It can be built with just 8 ETFs.
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What is the historical return of Rob Arnott’s portfolio?
Here is the historical return of Rob Arnott’s portfolio.
Portfolio data was last updated on 11th of November 2022, 11:40 ET
| Name | Year to date | Return in 2021 | 10 year return | CAGR since 1989 (%) | STDEV | Draw Down | Expense ratio | Yield |
|---|---|---|---|---|---|---|---|---|
| Rob Arnott Portfolio | -16.69 | 11.15 | 5.94 | 7.5 | 7.15 | -14.71% | 0.17% | 1.8 |
| Rob Arnott ETF.com model portfolio | -16.5 | 12.09 | 6.07 | 7.75 | 7.89 | -16.70% | 0.21% | 2.28 |
Here is what the table is showing you
Year to date: This shows what the portfolio has returned this year starting from the first trading day of the year.
10 Year return: This shows the compounded annualized growth rate over a ten-year period. The current year is excluded from calculations.
CAGR since 1989: This shows the compounded annualized growth rate since 1989. The current year is excluded from calculations.
Expense ratio: This shows the cost of holding the portfolio if you were to construct the portfolio using the proposed ETFs.
Yield: This is the expected dividend yield of the portfolio.
Please note that past performance is not a guarantee of future returns.
How does the Rob Arnott’s portfolio compare to the best portfolios?
Below you can see the returns of the best portfolios that we have benchmarked.
| Name | See Portfolio | Year to date | Return in 2021 | 10 year return | CAGR since 1989 (%) | Draw Down |
|---|---|---|---|---|---|---|
| Premium Portfolio |  | -20.97 | 32.14 | 13.2 | 11.81 | -35.43% |
| Premium Portfolio | | -18.7 | 28.78 | 16.52 | 11.28 | -37.63% |
| Premium Portfolio | | -19.64 | 25.67 | 16.29 | 11.25 | -37.00% |
| Premium Portfolio | | -23.99 | 13.49 | 11.03 | 11.21 | -44.87% |
| Premium Portfolio | | -12.0 | 28.17 | 14.47 | 11.14 | -35.26% |
| Premium Portfolio | | -14.9 | 24.75 | 11.85 | 10.99 | -36.46% |
| Premium Portfolio | | -14.79 | 29.02 | 13.15 | 10.99 | -40.85% |
| Premium Portfolio | | -20.6 | 20.7 | 11.45 | 10.93 | -37.91% |
| Premium Portfolio | | -15.12 | 24.51 | 11.87 | 10.88 | -36.35% |
| Premium Portfolio | | -19.38 | 22.92 | 14.99 | 10.85 | -32.77% |
How Do You Build Rob Arnott’s portfolio with etfs?
Here is how you build Rob Arnott’s portfolio with ETFs
- 10% Large Cap Blend (VOO)
- 10% Total International Stocks (VEA)
- 10% REITs (VNQ)
- 10% Commodities (DBC)
- 10% Long Term Treasuries (TLT)
- 20% Intermediate Corporate Bonds (LQD)
- 10% TIPS (VTIP)
- 20% International Bonds (BNDX)
The letters in brackets denote the stock symbol for the recommended ETF. You can look up the symbols at your stockbroker. You can see a listing of all the ETFs we recommend on this page.
Make sure you select the right ETFs!
There are a lot of ETFs! It is pretty boring to sift through hundreds and hundreds of ETFs just to find the right one, but it is worth it!
Finding the right and BEST ETF could earn you a lot more money than number two on the list.
We have done the work for you – all for FREE.
We have carefully selected ETFs 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 (they need to be of the UCITS kind!).
We have listed 47 of the best ETFs in our article What Are The Best ETFs For European Investors? (Here Is 47).
As of 2021 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.
Who is Rob Arnott?
Rob Arnott is the founds and chairman of Research Affiliates.
Research Affiliates is a giant in wealth management with $193 billion in assets under management.
Research Affiliates license their portfolio strategies to other wealth management firms. An example of this is their RAFI index used by ETF provider Invesco for many of Invesco’s smart-beta ETFs.The ETFPRF – Invesco FTSE RAFI US 1000 ETFshould be well known to smart-beta investors.
Rob Arnott is their founder. He is the archetypical investment specialist with over 100 academic articles to his name. He is also the author of the bookThe Fundamental Index: A Better Way to Invest. In that, he lays out the method for constructing the above-mentioned RAFI index. It is co-written with Jason Hus and John West who are both smart-beta masterminds.
Description of the Rob Arnott portfolio
The Rob Arnott portfolio comes from an article from the now-defunct indexuniverse.com, where Robb Arnott analyzed hedge-fund performance against a model portfolio.
The article is nowavailable at etf.com.
Meb Faberincluded the model portfolio in his fantastic book Global Asset Allocation: A Survey of the World’s Top Asset Allocation Strategies.The portfolio that Meb Faber presented in his book is slightly different from the one presented at indexuniverse.com. Originally Robb Arnott proposed an equal weight of the following asset classes:
- Commodities
- REITs
- Emerging market bonds
- TIPS
- High-yield bonds
- Long-term U.S. government bonds
- Unhedged non-U.S. bonds
- International stocks
- U.S. stocks
- investment-grade bonds
Meb Faber’s version merged some of the bond asset classes, probably due to missing time-series data for the asset classes.
We present both versions here as we have time-series data for all asset classes. We believe it offers a smidgin of a higher fidelity to the original model portfolio. Spoiler: The higher fidelity model has slightly higher returns. We call it the_Rob Arnott ETF.com model portfolio._
If we consider Rob Arnott’s position on smart-beta he would most likely recommend a different portfolio. A portfolio with the majority of asset classes dedicated to smart-beta index strategies. The portfolios have a 50% allocated to bonds so we don’t expect to see record-breaking returns but we do expect to see a low drawdown.
Where can I learn more about Rob Arnott?
- As mentioned, his book The Fundamental Index: A Better Way to Investis very worthwhile. It was one of the first books I read detailing smart-beta strategies.
- Meb Faber’s interview with Rob Arnott is here.
- Barry Ritholtz interview with Rob Arnott on his Master in Business series. You can find**links here.**
Suggestions for your next steps
Finding the right portfolio is hard. Maintaining your portfolio is also daunting.
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You stand to gain thousands more dollars EACH YEAR for the price of a few months of Netflix.
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 provide higher returns in the long run. It is completely FREE.
You can find the rebalance worksheet in our article Here Is The Most Easy To Use Portfolio Rebalance Tool.
Rebalancing lowers your portfolio risk and can increase your returns.
