Lazy portfolios

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Lazy portfolios are designed to perform well in most market conditions. Most contain a small number of low-cost funds that are easy to rebalance. They are "lazy" in that the investor can maintain the same asset allocation for an extended period of time, as they generally contain 30-40% bonds, suitable for most pre-retirement investors.

Three fund lazy portfolios

There are a number of popular authors and columnists who have suggested 3 fund lazy portfolios. These typically consist of three equal parts of bonds (total bond market or TIPS), total US market and total international market. In addition, consider that there are several close alternatives to these funds, especially when purchasing through vanguard. For example, consider that the "Vanguard Inflation-Protected Securities Fund" also has a short term alternative, "Vanguard Short-Term Inflation-Protected Securities Index Fund" (tickers VTIPX or VTAPX) which can offer slightly less volatility in NAV.

3-fund lazy portfolios
Bill Schultheis' Coffeehouse portfolio [1]
% Allocation Fund Mutual Fund ETF Fund (ER)
Investor's (ER) Admiral's (ER)
33% Vanguard Total Bond Market Index Fund VBMFX (.22%) VBTLX (.10%) BND (.10%)
34% Vanguard Total Stock Market Index Fund VTSMX (.17%) VTSAX (.05%) VTI (.05%)
33% Vanguard Total International Stock Index Fund VGTSX (.22%) VGIAX (.16%) VXUS (.16%)

Scott Burns' Margarita portfolio / Andrew Tobias' 3 Fund portfolio[2]
% Allocation Fund Mutual Fund ETF Fund (ER)
Investor's (ER) Admiral's (ER)
33% Vanguard Inflation-Protected Securities Fund VIPSX (.20%) VAIPX (.11%) -
34% Vanguard Total Stock Market Index Fund VTSMX (.17%) VTSAX (.05%) VTI (.05%)
33% Vanguard Total International Stock Index Fund VGTSX (.22%) VGIAX (.16%) VXUS (.16%)

Core four portfolios

As proposed by Rick Ferri on the Bogleheads® forum, the Core Four are four funds which form the "cornerstone" of a portfolio. Using Vanguard funds these four low-cost, total market funds would be:

Fund Mutual Fund ETF Fund (ER)
Investor's (ER) Admiral's (ER)
Vanguard Total Bond Market Index Fund VBMFX (.22%) VBTLX (.10%) BND (.10%)
Vanguard Total Stock Market Index Fund VTSMX (.17%) VTSAX (.05%) VTI (.05%)
Vanguard Total International Stock Index Fund VGTSX (.22%) VGIAX (.16%) VXUS (.16%)
Vanguard REIT Index Fund VGSIX (.24%) VGSLX (.10%) VNQ (.10%)

Rick proposes that investors first determine their bond allocation. With the remaining funds, allocate 60% to US stock, 30% to international and 10% to REIT. For example, for 60/40 and 80/20 portfolios, you would end up with the following:

Fund Vanguard Total Bond Market Index Fund Vanguard Total Stock Market Index Fund Vanguard Total International Stock Index Fund Vanguard REIT Index Fund
60/40 40% 36% 18% 6%
80/20 20% 48% 24% 8%
Core Four 60 40.PNG Core Four 80 20.PNG

Rick stresses that the exact numbers aren't important. For the 60/40 portfolio, you could increase Vanguard REIT Index Fund to 10%, drop Vanguard Total Stock Market Index Fund to 35% and the Vanguard Total International Stock Index Fund to 15% if you like round numbers.

The core-four is just a low cost foundation for your portfolio. You could add a slice of value stocks (US and/or International). You could split the bond portion between Treasury Inflation Protected Securities and nominal bonds, which would result in a slightly more conservative version of David Swensen's model portfolio (less international stock and less REIT, but otherwise the same four base funds plus TIPS.

More lazy portfolios

Beyond the simple 3- and 4-fund lazy portfolios are more complex portfolios. These are still "lazy" in that they contain enough bonds (typically 30-40%) to allow the investor to maintain the same AA for much of the accumulation phase of their lives. The more complex funds add REITs, and 'slice and dice' the US and/or International stocks, adding large and small value to the mix. It is worth noting that in some of the cases outlined below, a simpler portfolio may be able to accomplish similar goals. For example, a small and value tilt away from the market may be accomplished by adding a small cap value fund, thus 'tilting' from a total stock market fund.

Bill Schultheis's "Coffeehouse" portfolio

This simple 7-fund portfolio was made popular by Bill Shultheis' book The Coffeehouse Investor. He advocates 40% in an intermediate term bond fund and 10% each in various stock funds. More information can be found at The Coffeehouse Investor. The Coffeehouse Portfolio contains only 10% international stocks (17% of total equities). It slices up the domestic portion, but uses a total international fund.

Asset Class % Allocation
Large Blend 10%
Large Value 10%
Small Blend 10%
Small Value 10%
Total International 10%
REIT 10%
Intermediate Term Bond Index 40%
CoffeeHouse Portfolio.PNG

William Bernstein's "Coward's" portfolio

William Bernstein is the author of several books including The Intelligent Asset Allocator and The Four Pillars of Investing. He introduced the Coward's Portfolio in 1996. The "coward" refers not to the investor's risk tolerance but to the strategy of hedging one's bets and having slices of a number of asset classes. This portfolio is similar to the Coffeehouse Portfolio except that short term bonds are used, and the international portion is divided into equal slices of Europe, Pacific and EM.

Asset Class % Allocation
Total Stock Mkt 15%
Large Value 10%
Small Blend 5%
Small Value 10%
Europe 5%
Pacific 5%
Emerging Markets 5%
Short Term Bond 40%
Bernstein Coward Portfolio.PNG

Frank Armstrong's "Ideal Index" portfolio

Frank Armstrong, author of The Informed Investor, proposed this portfolio for an MSN Money article. It contains a smaller allocation to bonds, and a much larger allocation to international stocks (in fact the equities, excluding REIT, are split 50/50 between domestic and international). Like Bernstein he advocates short term bonds. If the domestic slices were replaced by a total market fund, this portfolio would be very close to the 3-Fund portfolios, with a slice of REIT added.

Asset Class % Allocation
Large Blend 7%
Large Value 9%
Small Blend 6%
Small Value 9%
Total International 31%
Short Term Bond 30%
Armstrong Ideal Index Portfolio.PNG

David Swensen's lazy portfolio

David Swensen is CIO of Yale University and author of Unconventional Success. His lazy portfolio uses low-cost, tax-efficient total market funds, a healthy dose of real estate, and inflation-protected securities (TIPS).

Asset Class % Allocation
Total Stock Mkt 30%
Intl Developed Mkt 15%
Emerging Markets 5%
Real Estate 20%
US Treasury Bonds 15%
TIPS 15%
Swensen Lazy Portfolio2.PNG

Canadian versions of lazy portfolios

The following spreadsheet contains charts and tables of Canadian versions of Couch Potato portfolios. These portfolios are suggested by the Canadian Couch Potato web site. [3] The portfolios include:

  1. The Global Couch Potato: This simple portfolio—popularized by MoneySense magazine—gives exposure to stock markets in all developed countries, as well as a firm foundation of Canadian bonds.
  2. The Complete Couch Potato: This portfolio goes beyond the basics to add three additional asset classes (emerging markets, real estate and real-return bonds) while remaining extremely easy to manage.
  3. The Yield-Hungry Couch Potato:This portfolio is designed for investors who are seeking current income rather than long-term growth from their investments, and who are using a non-registered account.
  4. The Über–Tuber: This portfolio is based on the academic work of Eugene Fama and Kenneth French. Because it includes so many funds, it may be difficult to manage and is not recommended for inexperienced investors. It is not likely to be efficient for accounts less than $200,000.

The fifth tab in the spreadsheet contains a table containing suggested ETFs for funding the portfolio allocations. Additional details regarding the portfolios are available from Canadian Couch Potato.

(view Google Spreadsheet in browser or download as xls, ods, or pdf)


  1. Kirk Report: Bill Schultheis' Coffeehouse Portfolios (2/13/2007) (Web site redesigned; link now requires paid membership.)
  2. Couch Potato Cookbook
  3. Canadian Couch Potato, viewed May 23, 2011.

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