The Coffeehouse portfolio is an indexed seven-fund portfolio popularized by financial planner and author Bill Schultheis. The portfolio holds the following asset classes:
- US large cap stocks
- US large value stocks
- US small cap stocks
- US small cap value stocks
- US REITS
- International stocks
- US total market bonds
In 2017 the Coffeehouse portfolio produced the following return.
The portfolio has a 60% equity/40% fixed income allocation and allocates a 10% slice to the six equity investments.
The Coffeehouse portfolio tilts the US stock allocation towards value stocks by devoting an equal allocation to large cap and small cap market index funds with large cap and small cap value index funds.
The portfolio uses a total international index fund for the international stock allocation, and a US total market bond index fund for bond allocations.
See the chart below (click image to enlarge).
The table below shows Coffeehouse portfolio allocations using Vanguard index funds and exchange-traded funds The portfolio can be implemented with index funds offered by other fund providers or exchange-traded funds.
Vanguard investors with larger portfolios can also use lower cost admiral shares for fund allocations.
Vanguard fund allocations
|Asset class||Vanguard investor share||Expense ratio||Vanguard admiral share||Expense ratio||Vanguard ETF||Expense ratio|
|US large cap||VFNIX||0.14%||VFIAX||0.04%||V00||0.04%|
|US large value||VIVAX||0.18%||VVIAX||0.06%||VTV||0.06%|
|US small cap||NAESX||0.18%||VSMAX||0.06%||VB||0.06%|
|US small value||VISVX||0.19%||VSIAX||0.07%||VBR||0.07%|
The returns history for an implemented Coffeehouse portfolio, included in the table below, consists of the performance history of Vanguard investor share index funds The second table provides compound returns, standard deviation of returns, and Sharpe ratios for 3 year, 5 year, 10 year, 15 year, 20 year, and 25 year returns. Investors using lower cost admiral shares would receive approximately +0.10% of additional net return.
The returns period includes portfolio performance during the two bear markets in the 2000 -2010 decade, as well as subsequent recoveries. Keep in mind that past performance does not forecast future performance.
|Term||CAGR return||Standard deviation||Sharpe Ratio|
See Coffeehouse portfolio- 2017, google drive spreadsheet for return computations.