The Best ETF Portfolio (7/16)

Many investors are searching for the best ETF portfolio and two of the world’s leading investors, Warren Buffett and David Swensen, have both reported their prescriptions. Below, see their performance versus the S&P 500, long-term Treasury bonds, and ETF PM’s new income and growth (IG) investable benchmarks:

Buffett vs Swensen 1607

Past performance can never guarantee future results. Worst Year data since 2000. 

Warren Buffett

Buffett, the world’s leading fundamental investor, advised his trustee to target aggressive growth with 90% S&P 500 and 10% cash. This past decade, Buffett’s ETF portfolio delivered 7% annualized, or 103% in total return. However, this 90/10 aggressive growth asset allocation lost 32% in the market crash of 2008, which is far too volatile for many investors.

David Swensen

Swensen, the world’s leading endowment fund manager, advised all retirees to target growth with 70% in risk assets (global equities and REITs), and 30% in fixed income (TIPs and medium-term Treasuries). This past decade, Swensen’s ETF portfolio delivered almost 7% annualized, or 96% in total return. Unfortunately, this 70/30 growth asset allocation fell 26% in the market crash of 2008, which is also too volatile for many investors.


Over the past decade, the S&P 500 (SPY) and long-term Treasuries bonds (TLT) delivered annualized returns of 7% and 8%, respectively. However, neither Buffett nor Swensen recommend an allocation to long-term Treasuries even though the asset class has historically delivered critical portfolio protection.

For example, during the stock market crash from 2000 to 2002, TLT delivered a 47% gain while SPY fell 38%. TLT also delivered shocking relative outperformance in 2008, 2011, and 2014 with gains of 34%, 34%, and 27% respectively. In addition, Treasury bonds are trouncing equities again this year.

At, ETF PM reports the performance and asset allocation for strategic core ETF portfolios that use long-term Treasury bonds for fixed income exposure. The Income & Growth (IG) investable benchmark returned 8% annualized this past decade, or 126% in total return, with a loss of 4% in the market crash of 2008.

ETF PM’s 2x and 3x leveraged income and growth portfolios (IG 2x and IG 3x) delivered annualized returns of 14% and 21%, respectively, or 286% and 670% in total return. In addition, all three of these efficient ETF portfolios fell by less than 5% in the market crash of 2008, and IG 3x gained 2% that year.

Bottom Line

Over the past decade, the ETF portfolio recommendations from Buffett and Swensen delivered 7% to 8% annualized, in-line with the returns from both long-term Treasuries and the S&P 500. However, investors would have done far better in an income and growth asset allocation focused on long-term Treasury bonds for fixed income.

In fact, when employing ETF PM’s strategically diversified investable benchmarks, leverage may be used to materially enhance performance at times. Strategic diversification can be a free lunch and leveraged diversification can be a free retirement nest egg.  However, investors must also be mindful of the risks, regulatory issues, and misunderstandings concerning leveraged ETFs.

Lastly, as per Greek philosopher Heraclitus, “Life is Flux” meaning “all things change.” Given this truth, and the wide range of economic environments and possibilities, the best investment portfolio is certain to change over time.

Contact ETF PM to learn more.

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