Big Rocks Conservative Portfolio by Larry Swedroe
The Big Rocks Conservative Portfolio is one of several model allocations developed by Larry Swedroe, a prominent evidence-based investing author and the former Director of Research at Buckingham Strategic Wealth. Swedroe introduced the "Big Rocks" framework in his book The Only Guide to a Winning Investment Strategy You'll Ever Need and related writings to illustrate how a small number of well-chosen asset classes -- the "big rocks" -- can build a robust portfolio. The conservative version is oriented toward capital preservation with modest growth.
Investment Philosophy
Swedroe's approach draws on the academic literature showing that exposure to specific risk factors -- particularly the size and value premiums documented by Fama and French -- can improve risk-adjusted returns. At the conservative end of his spectrum, the portfolio heavily weights fixed income to reduce short-term volatility, while a modest equity allocation tilts toward small-cap and value stocks to capture risk premia. The idea is to earn the highest expected return available for a given level of risk.
Who It's For
This portfolio is intended for investors with a low risk tolerance, a shorter time horizon, or those who are already in or near retirement and prioritise capital preservation over growth. It suits someone who understands the factor investing logic but has limited ability or willingness to endure large portfolio drawdowns.
Pros
- Heavy fixed-income weighting provides significant protection during equity market downturns
- Factor tilts toward small-cap and value aim to capture risk premia even within the modest equity sleeve
- Evidence-based construction grounded in peer-reviewed academic research
Cons
- Low equity allocation means limited participation in long equity bull markets
- Factor tilts can underperform broad market indices for extended periods, testing investor patience
- More complex to implement than a simple three-fund portfolio due to the multiple factor-tilted sleeves
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Target Allocation
Performance Snapshot
Rolling Returns
| Period | Low | Average | High |
|---|---|---|---|
| 1 Year | -18.6% | +6.8% | +28.0% |
| 3 Year | -3.2% | +6.3% | +15.0% |
| 5 Year | +1.1% | +6.2% | +12.2% |
| 10 Year | +3.0% | +6.3% | +9.8% |
Growth of $10,000
Historical Drawdown
Percentage decline from the portfolio's peak value at each point in time.
Rolling Returns
Annualised return for each rolling period ending on that date.
Annualised return for each 1Y period ending on that date.