The Lazy Portfolio: An Empirical Analysis of the Risk-return Characteristics of Static Investment Portfolios

Open Access
Sears, Eric Daniel
Area of Honors:
Bachelor of Science
Document Type:
Thesis Supervisors:
  • Michelle Lowry, Thesis Supervisor
  • James Alan Miles, Honors Advisor
  • Chris Muscarella, Faculty Reader
  • lazy portfolio
  • asset allocation
  • active investing
  • passive investing
  • efficient frontier
  • regression analysis
  • diversification
  • Sharpe ratio
This paper examines the risk-adjusted profitability of several “lazy” portfolios recommended by well-known portfolio managers. A lazy portfolio constitutes simple combinations of asset classes that serve the purpose of needing little attention and appeal to the average retail investor. Primarily using Vanguard Index Funds, I construct these portfolios and apply simple investment performance metrics. This paper uses the Sharpe ratio, regression analysis, and the construction of efficient frontiers to rank and study the various portfolios. The study found that Harry Browne’s Permanent Portfolio significantly outperformed the set of examined portfolios. Given the results from Harry Browne’s permanent portfolio, I also discuss the financial implications of gold as a safe haven asset.