Simple 60/40 allocation has beaten both Swensen's and Bernstein's portfolios since 1979

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CULater
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Simple 60/40 allocation has beaten both Swensen's and Bernstein's portfolios since 1979

Post by CULater » Wed Dec 06, 2017 11:43 am

For most investors, the optimal portfolio strategy might also be the simplest one, but don’t expect experts to recommend it, says one author and financial adviser.

It took a lot of time and research to come to the conclusion that simple portfolios not only perform well, but often deliver better risk-adjusted returns, especially after accounting for fees and taxes.

Gray and his team at Alpha Architect have compared asset allocation strategies used by Yale’s David Swensen and financial theorist William Bernstein.

Comparing these two strategies with a simple portfolio made up of 60% stocks and 40% bonds from 1979 to 2014, Gray was surprised to find that the latter performed better than both Swensen’s and Bernstein’s portfolios on risk-adjusted basis with the added advantage of a much smoother ride along the way.
https://www.marketwatch.com/story/for-m ... 2017-12-06
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azanon
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Re: Simple 60/40 allocation has beaten both Swensen's and Bernstein's portfolios since 1979

Post by azanon » Wed Dec 06, 2017 12:08 pm

There were TIPS in 1979?!?

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saltycaper
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Re: Simple 60/40 allocation has beaten both Swensen's and Bernstein's portfolios since 1979

Post by saltycaper » Wed Dec 06, 2017 12:16 pm

Helpful if you have a time machine that can only go back to 1979, but you'd probably pick a different AA if that was the case. The article also states:
“The marginal 60/40 outperformance is driven by the fact that the S&P 500 SPX and 10-year bonds were the top two performing assets over this time period. During a different time period, a more diversified approach is probably a safer bet if you are trying to maximize benefits of diversification,” wrote Gray.
"I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said." --Alan Greenspan

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Re: Simple 60/40 allocation has beaten both Swensen's and Bernstein's portfolios since 1979

Post by livesoft » Wed Dec 06, 2017 12:24 pm

Yes, but rebalancing between the 2 portfolio did better!
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azanon
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Re: Simple 60/40 allocation has beaten both Swensen's and Bernstein's portfolios since 1979

Post by azanon » Wed Dec 06, 2017 12:33 pm

saltycaper wrote:
Wed Dec 06, 2017 12:16 pm
Helpful if you have a time machine that can only go back to 1979, but you'd probably pick a different AA if that was the case. The article also states:
“The marginal 60/40 outperformance is driven by the fact that the S&P 500 SPX and 10-year bonds were the top two performing assets over this time period. During a different time period, a more diversified approach is probably a safer bet if you are trying to maximize benefits of diversification,” wrote Gray.
Fortunately, no one lost money on the Swensen portfolio since TIPS weren't around!

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