The 7Twelve Portfolio is recommended by Craig Israelsen in his book 7Twelve: A Diversified Investment Portfolio with a Plan. The name is derived from equally dividing your portfolio between 12 funds in 7 asset categories: US stock, non-US stock, real estate, resources, US bonds, non-US bonds, and cash.
Asset Allocation
- 8.3% Large Cap Blend
- 8.3% Mid Cap Blend
- 8.3% Small Cap Blend
- 8.3% World
- 8.3% Emerging Market
- 25% Intermediate Term Bonds*
- 8.3% Tbills/Cash
- 16.6% Commodities**
- 8.3% REITs
(*) Israelsen specifically recommends equal parts Domestic Bonds, International Bonds, and TIPS. Since I don’t have specific data for every asset, I allocated this portion to intermediate term bonds. While this is a pretty good proxy that should model the design intent reasonably well, be sure to read Israelsen’s justifications for why he chooses the bonds he does.
(**) He specifically recommends 8.3% commodities and 8.3% natural resources, but good data for natural resources is not available. Keeping with his theme of having two equal segments in the “resources” category, I allocated the natural resources to the commodities portion. There’s a decent amount of overlap in commodities and natural resources ETFs, so I anticipate this will not change the results all that much.
The charts below display the results for the ex-US version of World. Non-US investors may also be interested in the US-inclusive option available in the calculators.
Because verified data is not available, this portfolio includes estimated returns prior to 1988. Data for those years is highlighted on each chart.
