Model Portfolios

Below you will find three widely regarded, time-tested portfolio allocations as well as three portfolios that I built. If you are investing on your own, this is a good place to start.

The Permanent Portfolio


“For the money you need to take care of you for the rest of your life, set up a simple, balanced, diversified portfolio. I call this a “Permanent Portfolio” because once you set it up, you never need to rearrange the investment mix— even if your outlook for the future changes. The portfolio should assure that your wealth will survive any event — including an event that would be devastating to any individual element within the portfolio… It isn’t difficult or complicated to have such a portfolio this safe. You can achieve a great deal of diversification with a surprisingly simple portfolio.” – Harry Browne

The Permanent Portfolio investment strategy is based on the economic cycle, which is composed of four basic categories, prosperity, inflation, deflation and recession. Four asset classes provide a means of profiting during each of these four economic states, without having to forecast or predict their uncertain arrival or duration. It doesn’t get any more straightforward, and with a maximum drawdown of -12.74% since 1973, this is the ultimate allocation for the risk-averse investor.

The Global Market Portfolio


The Global Market Portfolio is the weighted sum of every asset in the world. In 1958, Nobel economist James Tobin first discovered this super-efficient portfolio that cannot be improved upon. It sits on a knife edge where any change you make is a change for the worse, delivering poorer returns for more risk.

In 1964, nobel economist William Sharpe proved that Tobin’s super-efficient portfolio was none other than the Global Market Portfolio: the portfolio of all risky assets proportionally weighted by their total market capitalization. It is interesting to note that the true global market portfolio would never rebalance – talk about a lazy portfolio.

The David Swensen (Yale) Model


David Swensen is manager of Yale University’s endowment fund where he’s generated returns in the range of 15% annually the past couple decades. In addition to U.S. stocks and bonds, Swensen advocates a broader range of asset classes. He suggests owning stocks from developed and emerging markets around the world. He also suggests owning real estate through a low-fee ETF.

In addition to traditional U.S. Treasury bonds, Swensen advises investors to own Treasury inflation-protected securities, or TIPS. Some of the slices of the pie will likely rise and fall at different times and at different rates so he says to rebalance once a year to maintain your target allocation.

Shaperfunds Permanent


Inspired by the O.G. Permanent Portfolio, Shaperfunds Permanent is a more aggressive 50/30/20 stock/bond/inflation protection portfolio with subtle technology tilt. Half of the portfolio owns stocks from all around the world with a slightly disproportional weighting in foreign stocks which are significantly cheaper than US stocks.

The technology tilt comes from 16% invested in the iShares Exponential Technologies ETF (XT). The aptly named ETF tracks the Morningstar Exponential Technologies Index and makes bets on disruptive technology stocks. Basically all the stuff that has the potential to transform society along with various industries. Robotics? It’s in XT. Genome sequencing? That’s in there too. The prospectus reads, “Exponential technologies displace older technologies, create new markets and have the potential to effect significant economic impacts.”

Finally, 20% of the portfolio is invested in inflation protected assets, gold and Bitcoin. Similar to gold, Bitcoin’s scarcity will drive the value over time as there will only ever be 21 million outstanding units. We hope that Bitcoin will prove to be a non-correlated asset and a hedge against catastrophe and/or inflation, much like gold has in the past.

Shaperfunds Social Responsibility


Shaperfunds Social Responsibility portfolio features the iShares MSCI ACWI Low Carbon ETF (CRBN). CRBN’s benchmark, the MSCI ACWI Low Carbon Target Index, aims to maintain the investment performance of global stocks while reducing carbon emissions by underweighting investment in high carbon footprint companies. The index takes into account two dimensions of the carbon footprint of its underlying stocks – carbon emissions and fossil fuel reserves.

Unlike Shaperfunds Permanent, Shaperfunds Social Responsibility portfolio is a 55/40/5 stock/bond/inflation protection portfolio. Gold is not included because of the adverse environmental consequences associated with gold mining. You can argue Bitcoin mining is energy intensive, but then you’d rule at virtually any company of insignificant size that use computers, so we won’t go there.

Shaperfunds Retirement


Shaperfunds Retirement has a far more aggressive 71/20/9 stock/bond/inflation protection allocation. The aggressive stance is only suitable for someone under the age of 35 saving for retirement. Remember that all our portfolios can be customized and adjusted based on client’s particular goals, timeframes and dispositions.

The main distinction, besides the heavy stock weighting, is 2% invested in Ethereum. Ethereum is the first loser of cryptocurrenies, behind Bitcoin. Again, you have the iShares Exponential Technologies ETF (XT) with the largest weighting of any of the Shaperfunds portfolios. The volatility is high, but so is the time frame. Pro-tip: Forget your password and contribute regularly regardless of market direction.