Coffeehouse Portfolio

The Coffeehouse Portfolio by Bill Schultheis is a traditional 60% stock portfolio that seeks to capture market returns while subdividing the stocks into several targeted funds.

Asset Allocation


  • 10% Large Cap Blend
  • 10% Large Cap Value
  • 10% Small Cap Blend
  • 10% Small Cap Value
  • 10% International Stocks
  • 40% Intermediate Bonds
  • 10% REITs
Local Interpretations

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Author


<strong>Bill Schultheis</strong>
Bill Schultheis

Bill Schultheis is a Wall Street veteran and a financial adviser at Soundmark Wealth Management. He talks about the Coffeehouse Portfolio in his book The Coffeehouse Investor.

Overview


The Coffeehouse Portfolio straddles an interesting line between promoting a conservative Classic 60-40 mindset while mixing in a more aggressive slice and dice approach to factor investing. Its author Bill Schultheis believes that the most important concepts in investing are actually not so much about specific asset choices but about three key principles:

  • Don’t put all your eggs in one basket
  • There’s no such thing as a free lunch
  • Save for a rainy day

In fact, in his unique humble style Schultheis underplays the specific asset allocation on his Coffeehouse Investor blog. He explains that his initial portfolio recommendation was intended to be just one example of a Coffeehouse-style portfolio, but that his suggestion soon took on a life of its own. As he describes it:

Despite its enduring popularity, the portfolio benefit isn’t found in its specific construction nor its 20-year returns. It’s found in investors “capturing their fair share of market returns” over time, as Mr. Bogle was fond of saying.

So one could argue that the Coffeehouse Portfolio might best be described as a mindset rather than a single specific asset allocation. Still, I think Schultheis perhaps sells himself a little short in his recommended portfolio. Even if it was just one example, I find a lot of wisdom in his work and believe his instincts are absolutely worth further study.

Books


Books about the Coffeehouse Portfolio, and others by Bill Schultheis

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Articles


Insights that mention the Coffeehouse Portfolio

Alternatives


Portfolios with a similar structure or design intent

Classic 60-40 — The same percentage of stocks and bonds without the stock tilts

Merriman Ultimate — The same basic idea with several more assets

Ideal Index Portfolio — Similar allocation with a growth fund and more international

Performance


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