Comparison - Lazy Portfolio ETF (2024)

FAQs

Which lazy portfolio is best? ›

Of the four, VWINX or VBIAX were better choices for those seeking lazy portfolios – in fact, because you don't have to rebalance the recipes yourself, they're lazier than the Lazy Eight! By contrast, tactical portfolios t. cvar and t. loss provided higher returns for those willing to rebalance their recipes monthly.

One option for a solid three-ETF portfolio could be to include the Schwab U.S. Dividend Equity ETF (SCHD), the Vanguard S&P 500 ETF (VOO), and the Invesco QQQ Trust (QQQ). The SCHD ETF focuses on high-quality dividend stocks, which can provide stable income and potential long-term growth.

A typical asset allocation for a lazy portfolio would be about 60% US stocks, 20% international stocks and 20% bonds. If you want to be a little less lazy, you can get more creative with your fund choices.

The current David Swensen Lazy Portfolio Sharpe ratio is 1.56.

Note that all the Lazy Portfolios had a maximum drawdown exceeding -35% over the past 10 years, with most worse than -40%. By comparison, the SPDR S&P 500 Trust ETF had a maximum drawdown of -50.8% with a 10-year return of 6.7%.

Building Your Lazy Portfolio

The 3 funds are US stocks (total US stock market), international stocks (total international stock market), and bonds. “It really can be that simple. You can buy an ETF for each of the three funds, set it and forget it.” said Zigmont.

Vanguard World Fund - Vanguard Information Technology ETF

Despite a widespread sell-off of growth stocks in 2022, Vanguard's tech sector exchange-traded fund (ETF) has produced a total return of just over 50% in the last three years and 187.6% over the last five years.

The 5% rule says as an investor, you should not invest more than 5% of your total portfolio in any one option alone. This simple technique will ensure you have a balanced portfolio.

What is the 10% portfolio rule? ›

The 10-5-3 rule can be used as a general principle for diversifying your investment portfolio. It suggests that 10% of your portfolio should be allocated to high-risk, high-reward investments, 5% to medium-risk investments, and 3% to low-risk investments.

Investing. When it comes to investing, the 80/20 rule asserts that 80% of your investment returns — or losses — come from only 20% of your assets.

Usually, any Sharpe ratio greater than 1.0 is considered acceptable to good by investors. A ratio higher than 2.0 is rated as very good. A ratio of 3.0 or higher is considered excellent. A ratio under 1.0 is considered sub-optimal.

Maximum Sharpe ratio portfolio (i.e. tangency portfolio)

A particular portfolio on the efficient side of the mean-variance frontier constructed using risky assets is the tangency portfolio. This portfolio lies on the mean-variance frontier of risky assets and achieves the maximum possible Sharpe ratio.

A Sharpe ratio less than 1 is considered bad. From 1 to 1.99 is considered adequate/good, from 2 to 2.99 is considered very good, and greater than 3 is considered excellent. The higher a fund's Sharpe ratio, the better its returns have been relative to the amount of investment risk taken.

1. The market portfolio is an efficient portfolio: its allocation provides the only optimal mix of risky assets; 2. For each asset, its expected return follows a simple linear relationship with the expected return of the market portfolio.

A good way to minimize risk is by creating a diversified and balanced portfolio with stocks, bonds, and cash that aligns with your short- and long-term goals. From there, you can broaden your portfolio to include other assets like real estate or high-risk investments for an increased likelihood of higher returns.

The common rule of asset allocation by age is that you should hold a percentage of stocks that is equal to 100 minus your age. So if you're 40, you should hold 60% of your portfolio in stocks. Since life expectancy is growing, changing that rule to 110 minus your age or 120 minus your age may be more appropriate.

Three-fund lazy portfolios

These usually consist of three equal parts of bonds (total bond market or TIPS), total US market and total international market.