The Coffeehouse Portfolio- 2018 Update

BillschultheisThe 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 2018 the Coffeehouse portfolio produced the following return.

Year Return
2018 -5.19%

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).

Coffeehouseportfolio (2)

Coffeehouse 60/40 allocation

Vanguard allocations

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 fund allocations

Asset class Vanguard admiral share Expense ratio Vanguard ETF Expense ratio
US large cap VFIAX 0.04% V00 0.04%
US large value VVIAX 0.06% VTV 0.06%
US small cap VSMAX 0.06% VB 0.06%
US small value VSIAX 0.07% VBR 0.07%
US REITS VGSLX 0.12% VNQ 0.11%
International VTIAX 0.11% VXUS 0.11%
Total bond VBTLX 0.05% BND 0.05%
Returns

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. Beginning in 2018, we measure returns using admiral shares of Vanguard index funds.

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.

Year Return
2018 -5.19%
2017 11.25%
2016 9.44%
2015 -0.93%
2014 9.33%
2013 14.88%
2012 11.93%
2011 2.06%
2010 14.68%
2009 20.26%
2008 -20.21%
2007 2.63%
2006 15.15%
2005 6.24%
2004 13.80%
2003 23.54%
2002 -5.56%
2001 1.88%
2000 7.25%
1999 8.30%
1998 6.89%
1997 17.95%
1996 14.53%
1995 22.90%
1994 -0.58%
1993 15.65%
1992 9.57%
1991 23.55%

Compound returns

Term CAGR return Standard deviation Sharpe Ratio
3 year 4.90% 9.01% 0.43
5 year 4.57% 7.35% 0.54
10 year 7.38% 7.85% 1.04
15 year 6.52% 10.21% 0.54
20 year 6.56% 10.05% 0.49
25 year 7.63% 9.95% 0.56

See Coffeehouse portfolio- 2018, google drive spreadsheet for return computations.

About

Barry Barnitz, administrator of both the Bogleheads® wiki and of Financial Page, a Bogleheads® blog. In addition I serve as an administrator of finiki, the Canadian financial wiki, and as an administrator of the John C. Bogle Center for Financial Literacy site.

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