Tilt-a-World: A Prediction-Free, 50/50 Slice & Dice Portfolio
Concept: Tilts toward emerging markets, small cap and value stocks are balanced by a higher-than-age-average bond allocation. The 50/50 philosophy makes the portfolio easy to keep track of, with even-weighted percentages wherever possible to reduce behavioral risks (i.e. the urge to tinker minutely).
Equities: The result is a series of splits that evenly deploy funds across large (50%) and small/medium (50%) market caps, as well as the United States (50%) versus international (50%) and developed versus emerging markets (again: each 50%).
Bonds: On the fixed-income side, a 50/50 division of TIPS and Treasuries creates a combination of deflation and inflation protection, all of balanced (intermediate) duration which provides flight-to-safety insurance without taking on excessive maturity risk.
Passive Management: Rebalancing (primarily with new money) and an increased bond allocation over time will keep its risk and reward ratios in check.
Acknowledgments: The Tilt-a-World portfolio owes its philosophical underpinnings to the following individuals: Jack Bogle (arguably the founder of indexing as such), William Bernstein (a master of the efficient frontier), Larry Swedroe (savvy bond specialist), Rick Ferri (portfolio expert) and David Swensen (correlations guru).
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