Indexing is Not Lazy (2/14)

The article below suggests that indexing is “lazy.” To the contrary, strategic indexing requires research, discipline, and patience that are all far from lazy.

See our article on leading index portfolios. It is most important to have the right architect for your asset allocation.

Also see InvestableBenchmarks.com. What is lazy, is simply taking your asset allocation from a source that lacks the best credentials.

For investors, a “lazy portfolio” may be a tonic for uncertain 2014

John Wasik, 2/3/14

For investors concerned about increasing market volatility, a defensive position might be a savvy move if stocks continue to retreat from 2013 highs.

You can do that with a “lazy portfolio”: Simply buy and hold passive investments and rebalance then annually. There are several flavors, including one that I designed years ago, but generally they are simple, diversified and somewhat defensive…

….

Of the Lazy portfolios that I’ve studied, David Swensen’s “Yale Individual Investor” might fit the bill for those seeking growth but not interested in overweighting either stocks or bonds. Swensen is the manager of Yale University’s endowment fund.

Swensen’s portfolio holds 30 percent in the Vanguard Total Stock Market Index, 20 percent in the Vanguard REIT Index, 20 percent in Vanguard Total International Stock Index, 15 percent in Vanguard Inflation Protected Securities, and 15 percent in Vanguard Long-Term Treasury Index. I own the first three of these funds in my own portfolio.

The Yale portfolio has proven fairly durable with this reasonably conservative strategy over the past five years, returning 15 percent annually, compared with 14 percent for the Vanguard balanced fund.

Click here for the full article.

 

 

 

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