Build Bogleheads Three Fund Portfolio With ETFs
What is the Three Fund Portfolio? The three-fund portfolio is a lazy portfolio that consists of …
What is the Ivy Portfolio?
The Ivy Portfolio can be built with 5 ETFs. The portfolio is exposed to 20% bonds, 60% equities, and 20% commodities.
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How do you you build the Ivy Portfolio?
Here is how you build the Ivy Portfolio with 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 the historical return of the Ivy Portfolio?
Below you can see the return of the Ivy 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 |
|---|---|---|---|---|---|---|---|---|
| 7Twelve Portfolio | -12.92 | 14.36 | 6.92 | 8.15 | 10.03 | -23.15% | 0.15% | 1.64 |
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 do the Ivy 5 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% |
What is the Ivy 5 portfolio?
The portfolio is featured in Meb Faber and the late Eric W. Richardson’s book. It seeks to mirror the asset allocation of the best endowment funds like Yale, Harvard, andPrinceton. The Ivy Portfolio incorporates traditional assets like stocks and bonds with commodities and REITs. It is a portfolio with global exposure.
Meb Faber’s Ivy 5 portfolio is a standard portfolio. It has exposure to most major asset classes. In many ways, it resembles a global market portfolio.
What are som variations on Meb Faber’s Ivy 5 Portfolio?
In their book, Meb and Eric describe several ways to construct an Ivy portfolio. Variations include the Ivy 10 Portfolio, which you can find here.They also describe various timing models for the portfolios.The timing model uses a simple moving average to decide whether to be invested in an asset class or not.
- Variation one: a portfolio of 10 asset classes instead of 5. See this post for details.
- Variation two: Timing model
If you’re looking for a more advanced portfolio, take a look at the Ivy 10 Portfolio.
What are the advantages and disadvantages of the Ivy 5 Portfolio?
Here are the advantages of the Ivy 5 portfolio
- The Ivy 5 portfolio is simple to understand
- The investment portfolio is global and well-diversified
- The Ivy 5 portfolio is constructed by Meb Faber – a respected financial quant that almost single-handedly has revived market timing.
- The portfolio makes a bet on commodities, which may be what you intend.
- You get a portfolio that resembles that of Yale and Harvard. David Swensen of Yale has had astonishing returns using a similar model.
Here are the disadvantages of the Ivy 5 portfolio
- The bet on commodities may notbe desirable.
- The inclusion of commodities makes the portfolio slightlymore expensive due to the higher expense ratio of commodity ETFs.
- The Ivy 5 portfolio may be too heavy on hard assets such as commodities and REITs (it allocates 40% in total to hard assets). Hard assets have done great in the past, but their performance may not continue.
- The investment portfolio may not be suitable for some people as the premise for the endowments holding a similar portfolio is holding the assets forever. Private investors do not have forever. Most have between 5-50 years.
Where can I learn more about Meb Fabers Ivy 5 portfolio?
Be sure to visit the Meb Faber site. It is a wealth of information and inspiration. His podcast is also excellent (the first episode is absolutely awesome as he runs down what investing is really about.
Suggestions for your next steps
Finding the right portfolio is hard. Maintaining your portfolio is also daunting.
If you want access to our high-performing portfolios then you want to take a look at the premium portfolios.
This is a paid product that gives you the 20 best-performing portfolios since 1989. The portfolios represent a great opportunity low-cost for you to get more money from your investment portfolios. We think it’s a no-brainer. The 20 portfolios are the best among the literally hundreds of other portfolios we have benchmarked since we started.
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.
Related questions
What is Meb Faber’s timing strategy?
Meb Faber uses a 10-month average for his timing strategies. If the asset price is below the 10-month average then it is sold and if it is above then the asset is bought (or held).
What is the Trinity portfolio?
The Trinity portfolio is a multi-strategy portfolio by Meb Faber. It consists of three parts. The first part is 1) assets diversified across a global allocation, 2) assets that are tilted toward investments value and momentum, and 3) exposure to trend following.
