The Larry Portfolio by Larry Swedroe balances small percentages of risky stocks with large percentages of safe bonds to maximize returns while minimizing risk.
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 Larry Portfolio
| % | Asset Class |
|---|---|
| 15% | United States Small Cap Value Stocks |
| 8% | Developed ex-US Small Cap Value Stocks |
| 7% | Emerging Markets Large Cap Blend Stocks |
| 70% | United States Intermediate Term Treasury Bonds |
Asset Notes
- Swedroe specifically recommends emerging market value. I don’t have data for this asset, so allocated the portion to emerging markets. I anticipate the numbers to be reasonably close, but be sure to read Swedroe’s reasoning for why he chooses the fund he does.
The Portfolio Charts tools use round numbers, so I reallocated the portfolio slightly while preserving the original design intent as closely as possible.
Other Versions
Swedroe seems to have shared a few different versions of the same basic idea over the years. For example, the Swedroe Min Fat Tails Portfolio documented by Meb Faber contains 15% small cap blend, 15% emerging markets, 35% T-Bills, and 35% TIPS.
Author
Larry Swedroe
Larry Swedroe is a financial author and the Chief Research Officer at Buckingham Strategic Wealth. You can read about the Larry Portfolio in the book Reducing The Risk of Black Swans by Swedroe and Kevin Grogan.
Overview
Larry Swedroe is one of the more prolific financial authors out there today, and if I had to pick the two topics where he carries the most weight they would be factor investing and risk management. The Larry Portfolio combines those two specialties into a single portfolio that simultaneously increases returns and reduces risk. It accomplishes those goals with very deliberate asset choices built into an intelligent risk management framework.
The Larry Portfolio is discussed in Swedroe’s book Reducing The Risk of Black Swans, which is an educational treatise on how to avoid unexpected catastrophic losses. The basic idea is to mix small percentages of assets with the highest expected returns (but also the highest uncertainty) with large percentages of stable bonds to protect yourself even if the risky assets totally tank. That idea of adjusting asset percentages inversely proportional to their volatility is called “risk parity”. And the Larry Portfolio is a prime example of that sophisticated financial concept distilled into a simple portfolio that anyone can build for themselves.
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Performance
Since 1970, an investor in the United States holding the Larry Portfolio earned an average 4.6% real return, with a baseline CAGR of 3.6% over 15 years. It supported a 4.5% safe withdrawal rate for 30 years and 3.2% indefinitely. Its worst peak-to-trough loss was 23%, and the longest a new investment spent below water was under 12 years.
Larry Portfolio Performance
| # | Metric | What it measures |
|---|---|---|
| 4.6% | Average return | Mean annual return after inflation |
| 3.6% | Baseline real return (15 years) | What 15-year stretches returned in the weaker outcomes |
| 4.5% | Safe withdrawal rate (30 years) | Highest spending rate that lasted 30 years in the worst case |
| 3.2% | Long-term withdrawal rate | The SWR floor over very long retirements |
| 23% | Deepest drawdown | Worst peak-to-trough loss after inflation |
| 12 years | Longest drawdown | Longest a new investment stayed below what you put in |
| 7.9% | 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) | 4.1% | 2.7% | 3.2% | 2.6% | 40% | 17 years | 9.6% |
| Canada (can) | 4.6% | 2.3% | 4.3% | 3.4% | 26% | 13 years | 7.7% |
| France (fra) | 4.4% | 2.9% | 3.9% | 3.1% | 26% | 15 years | 8.6% |
| Germany (deu) | 4.1% | 2.6% | 3.7% | 2.9% | 29% | 15 years | 9.1% |
| Italy (ita) | 4.4% | 2.3% | 4.3% | 3.4% | 23% | 14 years | 9.1% |
| Japan (jpn) | 3.8% | 2.9% | 3.9% | 2.9% | 40% | 12 years | 8.8% |
| Netherlands (nld) | 3.8% | 2.2% | 3.4% | 2.6% | 31% | 16 years | 9.3% |
| Spain (esp) | 3.6% | 2.1% | 3.2% | 2.4% | 38% | 22 years | 10.4% |
| Sweden (swe) | 5.2% | 3.5% | 4.1% | 3.5% | 23% | 13 years | 10.5% |
| Switzerland (che) | 3.3% | 1.4% | 2.8% | 2.0% | 47% | 22 years | 11.2% |
| United Kingdom (gbr) | 4.3% | 2.0% | 3.8% | 3.0% | 40% | 16 years | 10.5% |
| United States (usa) | 4.6% | 3.6% | 4.5% | 3.2% | 23% | 12 years | 7.9% |
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 Larry Portfolio
Comparisons
How the Larry Portfolio compares to other options
Alternatives
Portfolios with a similar structure or design intent
All Seasons Portfolio — Similar portfolio structure to balance volatility risk between assets
Merriman Ultimate — Shares a strong belief in the small and value factors
Permanent Portfolio — Also balances a smaller percentage of stocks with other assets
Articles
Insights that mention the Larry Portfolio
Discussion
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