The 7Twelve Portfolio by Craig Israelsen is an asset-based approach to diversification that balances portfolio returns by investing in a wide variety of unique asset types.
Home Country
Portfolio Charts is able to translate portfolio information to the local currency, inflation, and available funds of many different countries. Choose the home country where you live, and it will update every section of the page.
Asset Allocation
How to build a 7Twelve Portfolio
Asset Notes
1. Israelsen specifically recommends equal parts large cap blend, mid cap blend, and small cap blend. The data here simplifies that to half large caps and half small caps. Because most large cap index funds include mid caps and many small cap funds also have more mid caps than you might expect, the results should be very similar. But if you want to follow his recommendation to the letter, you might consider looking for a separate mid-cap fund.
2. Israelsen specifically recommends equal parts nominal bonds and TIPS. Since I don’t have specific data for TIPS, 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.
3. 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.
4. The Portfolio Charts tools use round numbers, so I reallocated the portfolio slightly while preserving the original design intent as closely as possible.
Author
Craig Israelsen
Craig L. Israelsen, Ph.D., is an Executive-in-Residence in the Financial Planning Program at Utah Valley University. He talks about the 7Twelve Portfolio in his book 7Twelve: A Diversified Investment Portfolio with a Plan.
Overview
In contrast to the old-school definition of diversification in terms of company count, the 7Twelve Portfolio seeks to enhance performance and reduce risk by diversifying among a wide variety of different asset types. The name is derived from the 12 different funds in the portfolio spread across 7 different asset classes.
- US Stock (large, mid, and small caps)
- Non-US Stock (developed, emerging)
- Real Estate
- Resources (natural resources, commodities)
- US Bonds (nominal, TIPS)
- Non-US Bonds
- Cash
Israelsen describes the thought process of mixing asset types as similar to making salsa, where individual ingredients may seem bland or way too spicy on their own but are all critical to the success of the recipe. The 7Twelve Portfolio assets are weighted in equal proportions, and he classifies it as a “core” portfolio that should be built around rather than tweaked. For example, his age based models all equally weight the same assets where the only difference is the percentage of cash that can be increased to reduce risk for older investors.
Featured Discussion
Performance
Since 1970, an investor in the United States holding the 7Twelve Portfolio earned an average 5.8% real return, with a baseline CAGR of 3.1% over 15 years. It supported a 4.4% safe withdrawal rate for 30 years and 3.4% indefinitely. Its worst peak-to-trough loss was 24%, and the longest a new investment spent below water was under 6 years.
7Twelve Portfolio Performance
| # | Metric | What it measures |
|---|---|---|
| 5.8% | Average return | Mean annual return after inflation |
| 3.1% | Baseline real return (15 years) | What 15-year stretches returned in the weaker outcomes |
| 4.4% | Safe withdrawal rate (30 years) | Highest spending rate that lasted 30 years in the worst case |
| 3.4% | Long-term withdrawal rate | The SWR floor over very long retirements |
| 24% | Deepest drawdown | Worst peak-to-trough loss after inflation |
| 6 years | Longest drawdown | Longest a new investment stayed below what you put in |
| 9.4% | Volatility (standard deviation) | Year-to-year variation in returns |
Stats for all home countries
Summary Stats by Home Country
| Home country | Average | Baseline | SWR | LTWR | Deepest | Longest | Volatility |
|---|---|---|---|---|---|---|---|
| Australia (aus) | 5.2% | 3.3% | 4.4% | 3.3% | 26% | 14 years | 10.2% |
| Canada (can) | 5.7% | 3.4% | 4.6% | 3.6% | 17% | 6 years | 8.2% |
| France (fra) | 5.8% | 3.9% | 4.8% | 3.8% | 26% | 11 years | 11.6% |
| Germany (deu) | 5.5% | 3.7% | 4.6% | 3.6% | 27% | 11 years | 12.1% |
| Italy (ita) | 5.8% | 3.7% | 4.8% | 3.7% | 27% | 9 years | 11.4% |
| Japan (jpn) | 5.6% | 3.4% | 4.3% | 3.4% | 34% | 11 years | 12.3% |
| Netherlands (nld) | 5.2% | 3.2% | 4.3% | 3.4% | 28% | 14 years | 12.3% |
| Spain (esp) | 5.0% | 3.0% | 4.0% | 3.2% | 29% | 14 years | 12.3% |
| Sweden (swe) | 6.4% | 4.7% | 5.1% | 4.2% | 21% | 9 years | 11.7% |
| Switzerland (che) | 4.7% | 2.1% | 3.6% | 2.7% | 39% | 16 years | 14.1% |
| United Kingdom (gbr) | 5.4% | 3.6% | 4.6% | 3.8% | 28% | 13 years | 11.2% |
| United States (usa) | 5.8% | 3.1% | 4.4% | 3.4% | 24% | 6 years | 9.4% |
To see this portfolio from a specific home country’s perspective, link readers to this page with ?home=COUNTRY added to the URL, using the codes shown in parentheses in the table above (e.g. ?home=aus). The portfolio itself is fixed by the page, so ?pk= has no effect here. More in the Guide for AI Assistants.
Charts
Different ways to visualize the 7Twelve Portfolio
Comparisons
How the 7Twelve Portfolio compares to other options
Alternatives
Portfolios with a similar structure or design intent
Ivy Portfolio — Broad equal weight diversification across many of the same asset categories
Golden Butterfly — Similar percentages of stocks, bonds, and real assets
Pinwheel Portfolio — Domestic and international diversification with targeted tilts
Articles
Insights that mention the 7Twelve Portfolio
Discussion
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