Buffett vs. Swensen (5/16)

In 2014, Warren Buffett provided his ETF portfolio recommendation, and we immediately compared it to David Swensen’s recommendation from 2005.

Below, see the updated Buffett vs. Swensen performance comparison in addition to long-term treasury bonds, the S&P 500, and a few of ETF PM’s other investable benchmark portfolios:

Chart IBU 1605 Buffett Swensen

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% annually, or 102% in total return. However, this 90/10 aggressive growth asset allocation would have 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 90% in total return. However, this 70/30 growth asset allocation would have lost 26% in the market crash of 2008, which is still too volatile for many folks.


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

For example, during the stock market crash from 2000 to 2002, long-term treasuries delivered a 47% gain while the S&P 500 lost -38%. TLT also delivered strong returns in 2008, 2011, and 2014 with gains of 34%, 34%, and 27% respectively.


At InvestableBenchmarks.com, ETF PM reports the performance and asset allocation for strategic core ETF portfolios that mainly use long-term treasuries for fixed income exposure. The Income & Growth (IG) portfolio returned 8% annually this past decade, or 116% in total return.

The technology focused Growth (GQ) portfolio and the Income & Growth 1.5x (IG 1.5x) portfolio both returned 11% annually, or more than 180% in total return. In addition, all three of these efficient ETF portfolios would have declined by less than 12% in the market crash of 2008.

Bottom Line

Over the past decade, the ETF portfolio recommendations from Buffett and Swensen would have delivered nearly 7% annualized, in-line with the returns from both long-term treasury bonds and the S&P 500. However, investors would have done much better, with far lower risk, in an income and growth asset allocation using long-term treasury bonds for fixed income exposure.

In fact, when employing ETF PM’s strategic investable benchmark portfolios, leverage may be used cautiously, and with discipline, to materially enhance performance at times. While strategic diversification can be a free lunch, leveraged diversification can be a free retirement nest egg.

Contact ETF PM to learn more.



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