Larry Swedroe’s lazy portfolio is carefully designed for conservative investors seeking lower volatility while maintaining exposure to growth. Swedroe, a well-regarded financial expert and author, emphasizes diversification through low-cost index funds and is known for advocating small-cap value stocks due to their historically strong performance.
This portfolio is structured with 30% in small-cap value stocks and 70% in intermediate-term treasuries, aiming to deliver long-term returns similar to stock-heavy portfolios but with less volatility. The small-cap value portion is further diversified as follows:
- 15% US Small-Cap Value
- 7.5% Developed Market Small-Cap Value
- 7.5% Emerging Market Small-Cap Value
This allocation provides a unique balance between domestic and international small-cap stocks, enhancing diversification and potential returns. The 70% intermediate-term treasury bond allocation adds stability, especially during market downturns, making it a low-risk choice for investors.
This portfolio stands out for its exclusive stock exposure to small-cap value stocks. Larry Swedroe firmly believes that, over the long term, small-cap value stocks deliver the best returns compared to other asset classes.
This conservative allocation can be compared to funds like the Vanguard Wellesley Income Fund (VWINX), a balanced mutual fund known for its conservative mix of stocks and bonds. However, while the Wellesley fund has a more traditional equity mix, Swedroe’s portfolio is tilted specifically toward small-cap value stocks, which can offer additional growth potential but come with somewhat higher volatility than the large-cap focus of Wellesley.
Here’s an itemized breakdown of Swedroe’s portfolio:
| Asset Class | Allocation |
|---|---|
| US Small-Cap Value | 15% |
| Developed Market Small-Cap Value | 7.5% |
| Emerging Market Small-Cap Value | 7.5% |
| Intermediate-Term Treasuries | 70% |
This portfolio aligns well with risk-averse investors looking for growth and stability, delivering a strategic mix between equities and bonds tailored to offer consistency across different economic cycles.