This is the home of the Mad Money Machine Lazy Portfolio Analysis.

The following table shows the returns of the Lazy Portfolios from the “Investment Professionals.” They are sorted by 5-year returns ending 2011. To see the contents of each portfolio, search for the portfolio name on this page.

And now a different look at the same portfolios, showing Annualized returns for 5 years plotted against the annualized risk (Standard Deviation).

The dividend results are in, and I’ve updated the numbers, graphs, and tables. Not much change in the relative performance of the portfolios, but the year-end percentages did rise.

And here is the table:

Another year bites the dust and Harry Browne once again wins.

Here are the Lazy Portfolio Smackdown results for 2011. Note: these numbers are preliminary because mutual fund dividends have not yet been reported. So those lazy portfolios that hold mutual funds that pay dividends in mid to late December will probably end up about 1% higher than these numbers.

Incredibly, the Harry Browne Permanent Portfolio wins again. It beat all other non-permanent portfolios by at least 5.5%! Have a look at the chart:

Click on the image to get a larger, more readable graphic.

To see the components of each Lazy Portfolio, visit the Professional Lazy Portfolios page.

Look how steadily the Harry Browne Permanent Portfolio (HBPP) gained during 2011. Especially when compared to the rest. Look at the wild ride they would have put you through from April until September. Tough to stomach that!

And for those of you who love a more tabular look:

Breaking down the HBPP, here are how the individual components performed for 2011:

  WOW, who would have thought that long-term treasuries would go up 34%? And look at gold, up almost 10%, which also marks its 11th consecutive year of gains. Holy bullion Batman! Even cash money did you better than your bank account, up 1.4% in short-term Treasuries.

Thank you Harry Browne!

How about the losers? Well, the silly Dilbert portfolio, all stocks, dropped almost 10%. Scott Adams recommended this (google it), but it is pretty dumb. Not much less dumb is the portfolio I put out a few years ago, also all stocks, that sought to mimic the IFA Portfolio 100, their riskiest plan. So in a year when risky stocks did poorly, portfolios that invested in all risky stocks stunk.

How about something more reasonable? Good old Rick Ferri, the guy who says his “best investment in gold was his wedding ring” how did he do for you in 2011? Here is his portfolio (prior to December dividend reporting)

He puts 40% into a broad bond index, thinks REITs are cool, and adds some international equities for spice. The portfolio gained you less than if you had put the whole thing into SHY, the short-term treasuries fund. (But dividends for December are still coming) That’s pretty stinky. And as you can see from the chart, you got a pretty wild ride in 2011 to boot. And he makes money doing this?

Which non-Permanent Portfolio did best in 2011? That would be the Scott Burns Couch Potato Portfolio, up 5.9%. (And remember that December dividends aren’t yet included in this result.)

Two funds: stocks and TIPS. Stocks flat-lined. TIPS made you some money. And the ride wasn’t too wild, especially when compared to the others. But HBPP was better in both performance and risk.

I don’t want to wrap up this year-end review without mentioning the poor performance of PFPFX, the Permanent Portfolio Fund. With HBPP up 11.5%, you’d expect that the mutual fund loosely based upon his philosophy would be close to that, but you’d be wrong. PRPFX was up only 2.2% (including December dividends) for 2011. Why? Because it deviates from HBPP in risky ways including Silver, Swiss Francs, and growth stocks. And of course it has a 0.77% expense ratio for its management fees. That is disappointing. But THEY got $118 million, based upon having $15.4 billion invested. I’m not liking this.

Gee whiz, I wish I could create a mutual fund that invested in VTI, 30-year Treasuries, IAU, and short-term Treasuries. I’d pay something like 0.08% and would charge you people 0.20%. Let’s see, with $15 billion dollars under management, I’d take in $18 million each year. Easy money!

How do ya like ridin’ the roller coaster?  I prefer the Slow Train Comin’. Looks like the Permanent Portfolios are still victorious. Two months to go!

And for your tabular view:

The Lazy Portfolio by Taylor Larimore with just three funds had the following performance, ending 30 Sept 2011:

1-mo: -5.2%

2-mo: -8.3%

YTD: -5.2%

Since 12/31/09: 5.4%

I just received word that the Taylor Larimore 3 Fund and 4 Fund lazy portfolios that I have listed on this site are in error.

There should only be a 3 Fund portfolio comprised of the following (and the %’s vary for individual investors):

40% Vanguard Total Stock Market Index Fund (VTSMX)
20% Vanguard Total International (VGTSX)
40% Vanguard Total Bond Market (VBMFX)

I will correct this in future portfolio analysis updates.

Here’s your monthly Lazy Portfolios update (not that you’re watching that often).

click for full-size ugly graphology

Let’s look at 1 and 2 month returns just for fun, ok? First, returns for September 2011:

Next, returns for August and September 2011 combined:

Ouch Rick Ferri! I think it was this time last year when I went to the Bogleheads convention and Rick Ferri laughed at the idea of owning gold. Who’s laughing now, Ricki? Difference between bottom and top is almost 22%. That’s shocking.

And of course, full Year-To-Date returns for 2011 through September:

Wow, only two Lazy Portfolios are positive this year. Guess who???

It is striking that the PRPFX mutual fund is off so significantly from the pure Harry Browne ETF version. It is probably due to the fact that PRPFX holds some silver, which got killed, and foreign currencies, which were down against the dollar. 

Harry Browne, thank you.

One-twelfth of 2011 is already behind us and it appears that the Permanent Portfolios have decided to give the other Lazy Portfolios a head start on the year. Said another way: The Permanent Portfolios are ON SALE! Here is the table of returns through January.

The individual components of the Permanent Portfolios are as follows:

VTI +2.0% – Total Stock Market

TLT -3.1% – Long Term Bonds

IAU -6.4% – Gold

SHY  +0.1% – T-bills

—-

VBR +0.6% – Small Cap Value

VWO -3.4% – Emerging Markets

And for reference, here the components of all of the Lazy Portfolios we track here.

For those of us who love to back-test different lazy portfolios, today we can spend our snow day using Simba’s spreadsheet, newly updated with 2010 returns.

I forgot that his comparison page only goes back to 1985 and that I was the one who modified the page to go back to 1972. Guess I’ve got some work to do.

Have fun.

In the FWIW category, here is a chart comparing the annual performance of select Gold ETFs. What’s up with GTU?

The fund expense ratios (according to morningstar.com except GTU* ) are as follows:

GLD: 0.40%

IAU: 0.25%

GTU: 0.38%*

SGOL: 0.39%

DGL: .75%

UBG: 0.30%

As we flip our calendars over to 2011 (or reuse our 1994 calendars), it is time to reflect upon how the various Lazy Portfolios performed for calendar year 2010. See the chart below that shows the cumulative monthly returns and the summary table of 2010 returns. The lazy portfolio that had the highest returns for 2010 was the IFA Index Portfolio 100 Bright Red with a 23% gain. But look at that swing from August through December. And also the swing from April through  June! Next, compare the gain of the Permanent Portfolio Mutual Fund (PRPFX – 18.5%) and the path it took to get there.

Cumulative Monthly Performance of Select Lazy Portfolios for 2010 (Click for big view. Data from Yahoo! Finance adjusted quotes from 12/31/09 through 12/31/10 except IFA from IFA.com and after max 0.9% advisor fee.)

The IFA 100 portfolio consists of 100% stocks and is designed to be IFA’s riskiest portfolio while the PRPFX is roughly 25% stocks and is designed to be lowest risk for return. Pretty interesting that they are the two highest returning portfolios for 2010. And they reached their peaks taking wildly different paths. The IFA 100 was erratic while the PRPFX was smooth and steady. The HBPP and PBPP were even steadier but with slightly lower returns than PRPFX.

In a fairer comparison of IFA portfolios to permanent portfolios, the IFA 50 had a 13.0% gain. The long term risk of IFA 50 is closer than IFA 100 to that of HBPP.

One of the surprises of 2010 was the relatively poor performance of the Larry Swedroe Minimum Fat Tails portfolio. Its long term risk-adjusted results for the last 30 years were quite good when compared to the HBPP. But not so in 2010. Digging into it shows that 70% of the portfolio is in TIPS or short term Treasuries. They were up 6.1% and 2.3%, respectively. The other 30% of the portfolio is 15% small cap value and 15% emerging market. They helped to bring the whole portfolio up to a 8% return for the year. I have often heard people say that investing in TIPS is protection against inflation. I think I’d rather have gold (up 29.3%) serving as intended in its inflation-protection role.

The purist Harry Browne Permanent Portfolio (ETF version) which invests one quarter in each stocks, bonds, cash, and gold had these respective gains: VTI 17.4%, TLT 9.0%, SHY 2.3%, and GLD 29.3% for a total return of 14.5%.

My variation of Harry Browne’s portfolio was up 15.8% because of a slightly riskier stock position. Instead of putting a quarter in VTI (up 17.4%), I place an eighth in small cap value (VBR up 25.1%) and an eighth in emerging markets (VWO up 19.5%) for a combined stocks gain of 22.3%.

And in a final note, I am finally fully invested in my own portfolio, with some minor variations due to legacy investments (like that amazing SCCO). So with my large cash holding through most of the year, my portfolio gained 11.3% in 2010. Considering that I am counting on an average 6% gain, I dun purty good.

Good luck in 2011. See you right here again in 365 days.

[Returns computed using Yahoo! Finance adjusted historical quotes from 12/31/09 through 12/31/10 except IFA from IFA.com and after 0.9% max advisor fee.]