Larry Portfolio

The Larry Portfolio is the name for a class of portfolios promoted by Larry Swedroe and Kevin Grogan in the book Reducing The Risk of Black Swans.  The main idea is that by purchasing the highest return stock assets available, one can reduce overall stock exposure and maintain similar returns to other portfolio options but with less volatility.

 

larry-portfolio

Asset Allocation

Stocks

Domestic

  • 15% Small Cap Value ¹

International

  • 7.5% World Small Cap Value ²
  • 7.5% Emerging Markets ³

Bonds

  • 70% Intermediate Term Bonds

 

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) Swedroe specifically recommends emerging market value.  I don’t have data for this asset, so allocated the portion to emerging markets (blend).  I anticipate the numbers to be reasonably close, but be sure to read Swedroe’s reasoning for why he chooses the fund he does.