MUSCULAR PORTFOLIOS

Muscular Portfolios are based on the book Muscular Portfolios (2017).

THE MAMA BEAR PORTFOLIO

The Mama Bear Portfolio broadly consists of the investing universe of nine asset classes shown below. The portfolio holds roughly equal-weight positions in up to three low-cost funds, which are determined by the strategy rules shown below.


Equity Asset Classes
US large-cap stocks
US small-cap stocks
Developed-market large-cap stocks
Emerging-market stocks

Alternative Asset Classes
US real-estate investment trusts
Commodities
Gold

Fixed-Income Asset Classes
US Treasury bonds, long-term
Cash (US T-bills, 1 to 12 months)

Strategy rules:
  1. Select the last trading day of the month, or any other trading day of the month, to reallocate the portfolio.
  2. Before market close that day, note the three funds with the highest 5-month total return.
  3. Sell any fund that is not ranked in the top three.
  4. Use the cash from any such sale to buy any fund the portfolio doesn’t already hold that is now in the top three.
  5. If the portfolio already owns all three top-rated funds because of a previous month’s rankings, do nothing.
  6. Rebalance the three positions back to equal weight only if a position is more than 20% off its ideal 1/3 weight.

THE PAPA BEAR PORTFOLIO

The Papa Bear Portfolio broadly consists of the investing universe of 13 asset classes shown below. The portfolio holds roughly equal-weight positions in up to three low-cost funds, which are determined by the strategy rules shown below.


Equity Asset Classes
US large-cap value stocks
US large-cap growth stocks
US small-cap value stocks
US small-cap growth stocks
Developed-market stocks
Emerging-market stocks

Alternative Asset Classes
US real-estate investment trusts
Commodities
Gold

Fixed-Income Asset Classes
US Treasury bonds, 30-year
US Treasury notes, 10-year
US high-quality corporate bonds
Non-US government & corp. bonds

Strategy rules:
  1. Select the last trading day of the month, or any other trading day of the month, to reallocate the portfolio.
  2. Before market close that day, note the three funds with the highest average of 1, 3, 6, and 12 mo. total return.
  3. Sell any fund that is not ranked in the top three.
  4. Use the cash from any such sale to buy any fund the portfolio doesn’t already hold that is now in the top three.
  5. If the portfolio already owns all three top-rated funds because of a previous month’s rankings, do nothing.
  6. Rebalance the three positions back to equal weight only if a position is more than 20% off its ideal 1/3 weight.

THE BABY BEAR PORTFOLIO

The Baby Bear Portfolio broadly consists of the investing universe of two asset classes shown below. The portfolio is for US investors who desire the simplest possible strategy; it is not a Muscular Portfolio. The portfolio holds roughly equal-weight positions in two low-cost funds, the allocation of which is determined by the strategy rules shown below.


Equity Asset Class
US total stock market

Fixed-Income Asset Class
US total bond market

Strategy rules:
  1. Start out by buying equal dollar amounts of each fund.
  2. Near year-end, rebalance the two funds to equal weight.
  3. At any time of year, deposit any new monies into the smaller position to rebalance it (to the extent possible).