In Money for Something we talk about the importance of investing in an “asset allocation” in order to reduce risk and benefit from diversification. The book presents one particular asset allocation, in which I personally invest, called “The Golden Butterfly”, which is a slight variation of “The Permanent Portfolio”.
You’ll find other popular allocations below—and for each, thanks to the great work by the folks at Portfolio Charts, we provide the constituent ETFs and weightings, as well as the portfolio’s historical long-term risk (volatility) and inflation-adjusted (real) return.
Don’t get hung up in decision paralysis—remember, it’s far far more important to stick to an allocation, than to have chosen the perfect one to begin with!
Harry Browne Permanent Portfolio
| Vanguard Total Stock Market ETF |
VTI |
25% |
0.03% |
| iShares 20+ Year Treasury Bond ETF |
TLT |
25% |
0.15% |
| iShares Gold Trust |
IAU |
25% |
0.25% |
| iShares Short Treasury Bond ETF |
SHV |
25% |
0.15% |
| Real Return: 5.0% — Risk: 7.1% |
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The Golden Butterfly Portfolio
| Vanguard Large-Cap Stocks ETF |
VV |
20% |
0.04% |
| Vanguard Small-Cap Value ETF |
VBR |
20% |
0.07% |
| iShares 20+ Year Treasury Bond ETF |
TLT |
20% |
0.15% |
| iShares Gold Trust |
IAU |
20% |
0.25% |
| iShares Short Treasury Bond ETF |
SHV |
20% |
0.15% |
| Real Return: 6.1% — Risk: 7.6% |
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The International Golden Butterfly Portfolio
For a non-US citizen interested in investing in the Golden Butterfly, but through low-cost ETFs not issued by US companies (e.g. to avoid potential US estate tax issues), the following is an implementation using ETFs issued by the Ireland subsidiary of iShares, all of which can be purchased on most European exchanges.
| iShares Core S&P 500 UCITS ETF |
CSPX |
20% |
0.07% |
| iShares S&P SmallCap 600 UCITS ETF |
ISP6 |
20% |
0.40% |
| iShares USD Treasury Bond 20+ Year UCITS ETF |
IDTL |
20% |
0.20% |
| iShares Physical Gold ETC |
SGLN |
20% |
0.25% |
| iShares USD Treasury Bond 1-3yr UCITS ETF |
IBTS |
20% |
0.20% |
The ticker symbols listed above correspond to the USD offerings of these products on the London Stock Exchange. If you’re purchasing them on another exchange (e.g. Switzerland), you can find their equivalent ticker symbols at the bottom of each above-listed webpage, in the section called “Listings”.
Rick Ferri Core Four Portfolio
| Vanguard Total Stock Market ETF |
VTI |
48% |
0.03% |
| Vanguard Total International Stock ETF |
VXUS |
24% |
0.11% |
| Vanguard Real Estate ETF |
VNQ |
8% |
0.12% |
| Vanguard Total Bond Market ETF |
BND |
20% |
0.05% |
| Real Return: 6.8% — Risk: 13.9% |
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William Bernstein Portfolio
| Vanguard S&P 500 ETF |
VOO |
25% |
0.04% |
| Vanguard Small-Cap ETF |
VB |
25% |
0.05% |
| Vanguard FTSE Developed Markets ETF |
VEA |
25% |
0.07% |
| iShares Short Treasury Bond ETF |
SHV |
25% |
0.15% |
| Real Return: 6.5% — Risk: 13.4% |
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David Swensen Yale Endowment Portfolio
| Vanguard Total Stock Market ETF |
VTI |
30% |
0.03% |
| Vanguard Total International Stock ETF |
VXUS |
20% |
0.11% |
| Vanguard Real Estate ETF |
VNQ |
20% |
0.12% |
| iShares TIPS Bond ETF |
TIP |
15% |
0.20% |
| iShares 20+ Year Treasury Bond ETF |
TLT |
15% |
0.15% |
| Real Return: 6.7% — Risk: 12.0% |
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Larry Swedroe Simple Portfolio
| Vanguard Small-Cap Value ETF |
VTI |
15% |
0.03% |
| Vanguard FTSE Emerging Markets ETF |
VWO |
15% |
0.14% |
| iShares Short Treasury Bond ETF |
SHV |
25% |
0.15% |
| iShares TIPS Bond ETF |
TIP |
25% |
0.20% |
| Real Return: 5.6% — Risk: 8.1% |
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