7Twelve Portfolio

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: domestic stocks, international stocks, real estate, resources, domestic bonds, international bonds, and cash.

 

7twelve-portfolio

Asset Allocation

Stocks

Bonds

Real Assets

 

Notes

1) Countries other than the United States are modeled with local regional data instead of pure domestic data for these assets.  CAN uses USA funds, while GER & UK use EUR funds.

2) The calculations assume that US investors use a World Ex-US fund while investors living in other countries use a World fund including the US.

3) 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.

4) 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.

5) The data is based on USA REITs, but a broad global REIT fund is also a reasonably close  alternative if no US fund is available.