Swensen and Ferri Portfolios


I added a pair of new lazy portfolios today — the Swensen portfolio and Rick Ferri Core Four portfolio.  Both fine choices.  However, these help demonstrate another larger point to keep in mind when considering portfolio options.

Looking at the charts, I’ll forgive you for having trouble telling them apart.

Swensen Portfolio CAGR Pixel ChartRick Ferri Core Four CAGR Pixel Chart

Swensen Portfolio CAGR Funnel ChartRick Ferri Core Four CAGR Funnel Chart

Each portfolio has different asset allocations.  Swensen prefers TIPS and short term treasuries to the total bond market, and both have different percentages of the various assets.  Note that Ferri uses notably more stocks and less REITs.  However, the performance between the two is extremely similar.  Why is that?

The short story is that they use the same general types if indices (US stocks, international stocks, REITs, and bonds), and while tweaking percentages sometimes feels like you’re making big changes, when you look at the big picture that isn’t always the case.

When evaluating your own portfolio, try not to get trapped so deep in the details that you lose sight of the big picture.  Rather than changing a few percentage points of stocks vs bonds to eek out a few extra tenths of a percent in your average returns, try something like adding a bit of real diversification and see what happens!