Swedroe is famous for the Larry Portfolio. What is that? It is a type of lazy wallet, that is “lazy”. A wallet to buy and never touch again. A wallet
well balanced, similar in some ways to Ray Dalio’s Permanent Portfolio and the Butterfly Portfolio, which we will discuss shortly. A wallet as good as the Perfect Wallet, which we recently talked about in this article. Swedroe popularized this wallet in his book, “Reducing the Risk of Black Swans: Using the Science of Investing to Capture Returns with Less Volatility “.
Quality equity without exposing yourself too much: here are the tips and practical examples for Larry portfolio investments
The simple basic idea of this portfolio is that it is not necessary to be exposed a lot to equity in order to have excellent performances. As long as the percentage of equity in the portfolio is of quality. And Swedroe has found this quality in emerging markets and small caps, that is, small capitalization companies. These types of stocks are much more technically aggressive than larger capitalization stocks. They could therefore give a great return. In this way the share of equity is contained, in percentage terms. Here’s a real tip and practical wallet example. Let’s see how the Larry Portfolio is composed.
For those interested in replicating it, the Larry Portfolio is 30% exposed to the stock market and 70% to the bond market. It can be replicated with only 4 ETFs, which are as follows.
- 15% iShares MSCI USA Small Cap UCITS ETF
- 7.5% SPDR MSCI World Small Cap UCITS ETF
- 5% iShares Core MSCI Emerging Markets IMI UCITS ETF
- 70% iShares USD Treasury Bond 3-7yr UCITS ETF
The portfolio is rebalanced annually, and reinvests dividends. Let’s talk about performance now. Over the past 10 years, this portfolio has provided an annualized performance of + 4.43%. Since its creation in January 1995, the portfolio has guaranteed an annualized performance of 6.87% as of May 31, 2020. In practical terms, $ 10,000 invested in 1995 would be worth 52,649.62 today.