Big Rocks Moderate Portfolio by Larry Swedroe
The Big Rocks Moderate Portfolio occupies the middle ground in Larry Swedroe's "Big Rocks" model allocation series. Swedroe, the former Director of Research at Buckingham Strategic Wealth and prolific author on evidence-based investing, designed the Big Rocks framework to demonstrate how a relatively small set of asset classes can construct a robust, factor-informed portfolio. The moderate version balances growth and stability with a roughly even split between equities and fixed income, using factor-tilted equity sleeves.
Investment Philosophy
At its core, the Big Rocks framework applies the academic evidence on factor investing — particularly the size and value premiums — within a clearly defined asset allocation structure. At the moderate risk level, the portfolio gives roughly equal weight to fixed income and equities while tilting the equity side toward small-cap and value stocks. Swedroe argues that this combination delivers better risk-adjusted returns than a plain market-cap-weighted balanced portfolio by capturing compensated risk premia rather than just market beta.
Who It's For
This is intended for investors with a medium risk tolerance and a medium-to-long time horizon, such as someone who is mid-career and saving for retirement but wants meaningful downside protection. It suits investors who understand and accept factor investing's potential for extended periods of underperformance relative to a simple index fund.
Pros
- Balanced equity-bond structure moderates drawdowns while maintaining meaningful growth potential
- Factor tilts aim to earn above-market returns over the long run within the equity allocation
- Grounded in peer-reviewed academic research on asset pricing
Cons
- More complex to implement and maintain than a simple three-fund or target-date portfolio
- Factor tilts can lag broad market indices for significant periods, which tests investor discipline
- Multiple sleeves increase rebalancing frequency and potential transaction costs
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Target Allocation
Performance Snapshot
Rolling Returns
| Period | Low | Average | High |
|---|---|---|---|
| 1 Year | -28.6% | +8.1% | +39.4% |
| 3 Year | -7.6% | +7.3% | +19.1% |
| 5 Year | -0.7% | +7.1% | +16.0% |
| 10 Year | +4.0% | +7.1% | +10.9% |
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.