The No-Brainer Portfolio by William Bernstein is a simple and straightforward approach to asset, region, and factor diversification that accomplishes all three in just four assets.
- 25% Large Cap Blend
- 25% Small Cap Blend
- 25% International Stocks
- 25% Short Term Bonds
While they’re not all direct iterations of the No-Brainer Portfolio, Bernstein talks about all types of asset allocations in his writings. Here are just a few examples, and you can also model any version you like using the Charts.
Four Pillars Medium — Expanding the No-Brainer into value factors and real estate
Coward’s Portfolio — A modest proposal for a naive allocation that beats the experts
Sheltered Sam 60-40 — A unique portfolio designed for a specific investing persona
Find country-specific versions and appropriate ETFs using the Performance charts.
The No-Brainer Portfolio, also sometimes called the Simpleton’s Portfolio, is an interesting study in asset allocation. Bernstein is a self-described “asset junkie” who enjoys discussing all types of increasingly sophisticated portfolios custom designed for unique investor needs and fine-tuned with advanced concepts like efficient frontiers. While the No-Brainer Portfolio is just the simplest introductory idea in The Intelligent Asset Allocator, I also think it uniquely expresses some of his most fundamental insights.
Bernstein tends to talk about his ideas self-deprecatingly in terms of naive but effective diversification, but the thing I find most interesting is how the No-Brainer Portfolio tackles three different types of diversification in the most efficient way possible. By adding small cap stocks, international stocks, and short term bonds to a traditional large cap stock fund, it demonstrates how easy it is to construct a well-considered asset allocation that doesn’t depend so much on the handful of large cap companies that tend to dominate stock returns. For a lot of people looking for maximum diversification with minimum effort, that really is a no-brainer.
Insights that mention the No-Brainer Portfolio
Portfolios with a similar structure or design intent
Permanent Portfolio — Another 4-asset approach that focuses on diversification
Ideal Index Portfolio — Similar portfolio structure showcasing value and growth tilts
Core Four Portfolio — Similar percentage of stocks with REITs instead of small caps
Change the home country to translate the portfolio to local assets, currency, and inflation.