Larry S. Overweight small-cap with low % of stock holdings?

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Larry S. Overweight small-cap with low % of stock holdings?

Post by 4th&Goal » Sat May 12, 2007 6:32 pm

I remember reading, and a search didn't help find it, that Larry Swedrow overweights small-caps in his relatively small percentage of stock holdings. I seem to remember something about taking a bit of extra risk on the equity side because his portfolio is mostly fixed income. I too now hold mostly fixed income funds and am interested in Larry's rationale.


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Post by mikenz » Sat May 12, 2007 10:02 pm

There is a current thread on the M* forum. Someone was asking what Rick, Larry, Taylor and others had in their personal portfolios. It was in the last few days.

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[Edit] that was the wrong thread. It is actually on the new forum here

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Post by larryswedroe » Sun May 13, 2007 7:29 am

My portfolio is now roughly
40% USSV
15% EMV
45% ISV

My total equity exposure is about 25%

I also own bit of RE and Commodities.

Heavily titled keeps my exposure to beta down while heavy tilt to small value and EMV gives me more diversification across asset classes, strong int'l diversification, and large risk premium. And the value premium has more persistent in the long term than the equity premium---though that may not be true going forward.

I estimate the expected return on this portfolio is roughly same as 60% TSM portfolio. So far less downside risk, but far less upsdie potential, with same expected return. That is good trade off for me because of very low marginal utility of wealth.
IMO that is good trade off for most investors as well.

Hope that helps

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