In Money for Something we talk about the importance of investing in an “asset allocation” in order to reduce risk and benefit from diversification. The book presents one particular asset allocation, in which I personally invest, called “The Golden Butterfly”, which is a slight variation of “The Permanent Portfolio”.

You’ll find other popular allocations below—and for each, thanks to the great work by the folks at Portfolio Charts, we provide the constituent ETFs and weightings, as well as the portfolio’s historical long-term risk (volatility) and inflation-adjusted (real) return.

Don’t get hung up in decision paralysis—remember, it’s far far more important to stick to an allocation, than to have chosen the perfect one to begin with!

Harry Browne Permanent Portfolio

Vanguard Total Stock Market ETF VTI 25% 0.04%
iShares 20+ Year Treasury Bond ETF TLT 25% 0.15%
iShares Gold Trust IAU 25% 0.25%
iShares Short Treasury Bond ETF SHV 25% 0.15%
Real Return: 5.0% — Risk: 7.1%      

The Golden Butterfly Portfolio

Vanguard Large-Cap Stocks ETF VV 20% 0.05%
Vanguard Small-Cap Value ETF VBR 20% 0.07%
iShares 20+ Year Treasury Bond ETF TLT 20% 0.15%
iShares Gold Trust IAU 20% 0.25%
iShares Short Treasury Bond ETF SHV 20% 0.15%
Real Return: 6.1% — Risk: 7.6%      

The International Golden Butterfly Portfolio

For a non-US citizen interested in investing in the Golden Butterfly, but through low-cost ETFs not issued by US companies (e.g. to avoid potential US estate tax issues), the following is an implementation using ETFs issued by the Ireland subsidiary of iShares, all of which can be purchased on most European exchanges.

iShares Core S&P 500 UCITS ETF CSPX 20% 0.07%
iShares S&P SmallCap 600 UCITS ETF ISP6 20% 0.40%
iShares USD Treasury Bond 20+ Year UCITS ETF IDTL 20% 0.20%
iShares Physical Gold ETC SGLN 20% 0.25%
iShares USD Treasury Bond 1-3yr UCITS ETF IBTS 20% 0.20%

The ticker symbols listed above correspond to the USD offerings of these products on the London Stock Exchange. If you’re purchasing them on another exchange (e.g. Switzerland), you can find their equivalent ticker symbols at the bottom of each above-listed webpage, in the section called “Listings”.

Rick Ferri Core Four Portfolio

Vanguard Total Stock Market ETF VTI 48% 0.04%
Vanguard Total International Stock ETF VXUS 24% 0.11%
Vanguard Real Estate ETF VNQ 8% 0.12%
Vanguard Total Bond Market ETF BND 20% 0.05%
Real Return: 6.8% — Risk: 13.9%      

William Bernstein Portfolio

Vanguard S&P 500 ETF VOO 25% 0.04%
Vanguard Small-Cap ETF VB 25% 0.05%
Vanguard FTSE Developed Markets ETF VEA 25% 0.07%
iShares Short Treasury Bond ETF SHV 25% 0.15%
Real Return: 6.5% — Risk: 13.4%      

David Swensen Yale Endowment Portfolio

Vanguard Total Stock Market ETF VTI 30% 0.04%
Vanguard Total International Stock ETF VXUS 20% 0.11%
Vanguard Real Estate ETF VNQ 20% 0.12%
iShares TIPS Bond ETF TIP 15% 0.20%
iShares 20+ Year Treasury Bond ETF TLT 15% 0.15%
Real Return: 6.7% — Risk: 12.0%      

Larry Swedroe Simple Portfolio

Vanguard Small-Cap Value ETF VTI 15% 0.04%
Vanguard FTSE Emerging Markets ETF VWO 15% 0.14%
iShares Short Treasury Bond ETF SHV 25% 0.15%
iShares TIPS Bond ETF TIP 25% 0.20%
Real Return: 5.6% — Risk: 8.1%