Coffeehouse Portfolio
A passive portfolio with 40% in bonds and 60% in stocks split into six 10% blocks, including small caps, value, international and real estate. Rebalanced once a year.
What the Coffeehouse portfolio is
It is a static seven-position portfolio named after Bill Schultheis' book, The Coffeehouse Investor. The author's website can no longer be consulted (the domain redirects to another company), and we have not been able to read the book. So we rely on two secondary sources, the Bogleheads wiki and Portfolio Charts, which agree on the split and differ only in the funds they use for each piece.
Quick facts
- Author
- Bill Schultheis
- Year
- n/a
- Origin
- Book
- Access
- Public and free
- Type
- Passive
- Assets
- 7
- Frequency
- Annual
- Difficulty
- Low
Who it is for
Anyone who wants a passive portfolio with many asset classes, plenty of equities outside the S&P 500 and a single rebalance a year.
Who it is not for
Anyone who prefers few pieces or does not want to tilt the portfolio toward small caps, value and real estate.
When it fits
For anyone who wants a static portfolio with a lot of diversification inside the equities and accepts holding seven positions. For anyone who prefers simplicity, the three-fund portfolio covers the essentials with fewer pieces.
Current signal
Coffeehouse Portfolio
Calculated with the closes of September 30, 2026.
No portfolio changes from last month.
Rules, step by step
40% goes to fixed income and the remaining 60% is divided into six equity blocks of 10% each:
| Piece | US ETF | Weight |
|---|---|---|
| Fixed income (total market) | BND | 40% |
| Large caps, blend | VOO | 10% |
| Large caps, value | VTV | 10% |
| Small caps, blend | VB | 10% |
| Small caps, value | VBR | 10% |
| International stocks | VXUS | 10% |
| Listed real estate (REIT) | VNQ | 10% |
There are no signals. You rebalance to return to those weights; the author's frequency is not verified and the site's convention is annual, at the end of December. The two kinds of sources differ in the vehicles. The Bogleheads wiki speaks of a total-market fixed income fund and total international stocks; Portfolio Charts uses intermediate-term Treasuries as fixed income and developed-market stocks as international. We follow the Bogleheads version (BND and VXUS).
Backtest and out-of-sample period
With real ETFs from Mar 2011 to Sep 2026, with annual rebalancing and a cost of 0.1% per trade, the portfolio returns 7.0% a year, with a maximum monthly drawdown of -19.5%, volatility of 9.6% and a Sharpe of 0.61. The worst year was 2022 (-14.2%). Average turnover is 6% a year.
The history starts in Mar 2011 because that is when data for the international ETF (VXUS) exists. The S&P 500 bought and held, measured from Mar 1993, gives 10.8% a year with a maximum drawdown of 51%. Since the start dates differ, that comparison is not clean.
A third party's figures
Portfolio Charts publishes its own version of the portfolio (with intermediate Treasuries and developed-market stocks, not the Bogleheads one) with US data from 1970 to 2025, in real terms and with annual data: a real volatility of 10.4% and a real maximum drawdown of 35.0%. The longest drawdown it records lasted ten years. These figures are after inflation and for a different version, so they are not comparable with those of our engine.
Growth of $100 (logarithmic scale) since , with 0.1% costs per trade. Data: US-listed ETFs, total return (dividends reinvested), before taxes.
Drawdowns from peak
| Strategy | CAGR | Volatility | Max drawdown | Sharpe |
|---|
Year by year
| Year | Coffeehouse Portfolio | S&P 500 | 60/40 |
|---|---|---|---|
| 2026 (to Sep 2026) | +5.6% | +12.7% | +5.8% |
| 2025 | +11.5% | +17.7% | +13.8% |
| 2024 | +8.3% | +24.9% | +14.7% |
| 2023 | +12.0% | +26.2% | +17.2% |
| 2022 | -14.2% | -18.2% | -17.0% |
| 2021 | +14.3% | +28.7% | +15.9% |
| 2020 | +8.3% | +18.3% | +15.0% |
| 2019 | +19.3% | +31.2% | +21.9% |
| 2018 | -5.2% | -4.6% | -2.4% |
| 2017 | +11.5% | +21.7% | +14.0% |
| 2016 | +9.6% | +12.0% | +7.6% |
| 2015 | -0.8% | +1.2% | +1.3% |
| 2014 | +9.3% | +13.5% | +11.7% |
| 2013 | +14.8% | +32.3% | +16.9% |
| 2012 | +11.6% | +16.0% | +11.1% |
| 2011 | -1.4% | +1.9% | +7.4% |
The first year may be partial. Returns are net of trading costs.
Taxes on rotating
The results above are before taxes. This portfolio is rebalanced once a year: historically it turns over only 6% of the portfolio a year on average, so it generates few sales.
In most countries each sale of an ETF in a taxable account realises a gain or loss that may be taxed, so rotating monthly is best done inside a tax-advantaged account (such as an IRA or 401(k) in the US, or an ISA or SIPP in the UK) where one is available. Rules vary by country and by account: check yours, or ask a tax adviser. See our methodology for how the results are calculated.
Criticisms and limits
Six equity blocks at 10% mean a strong tilt toward small companies, value and real estate compared with their market weight, and the result depends on those premiums persisting. The author's book has not been consulted: the rules come from two secondary sources that agree on the split and differ on the funds.
- The tilt toward risk premiums. Six equity blocks at 10% give a lot of weight to small caps, value and real estate relative to the market. The result depends on those premiums persisting. This observation is ours.
- Book not consulted. The rules come from two concordant secondary sources, but the author's rebalancing frequency is not verified.
- Several versions. Depending on the source, the fixed income and the international part change fund.
- Figures from another vehicle. The third party's figures correspond to a different version and to real annual data.
How to run it
- Map each ETF to the fund you actually hold, and check its fees before buying.
- Set an annual rebalancing date.
- Work out the orders with the rebalancing calculator.
Similar strategies
Permanent Portfolio
25% stocks, long bonds, gold and cash; annual rebalancing
Passive · AnnualAll Weather Portfolio
30% stocks, 55% bonds, 15% gold and commodities; annual rebalancing
Passive · AnnualThree-fund portfolio (Bogleheads)
US stocks, international stocks and bonds; annual rebalancing
Frequently asked questions
What weights does the Coffeehouse portfolio have?
40% in fixed income and 10% in each of six equity blocks: large blend, large value, small blend, small value, international and listed real estate.
Are the Bogleheads and Portfolio Charts versions the same?
They have the same split but use different funds. Bogleheads speaks of total-market fixed income and international; Portfolio Charts uses intermediate Treasuries and developed-market stocks. We calculate with the first.
How often is it rebalanced?
We have not verified it in the book. Our backtest does it once a year, at the end of December.
Why do the third party's figures not match those on this page?
Because they are for a different version of the portfolio, in real terms (after inflation), with annual data and from 1970.
Is this investment advice?
No. It is educational information about a published portfolio. Backtests and past performance do not guarantee future results, and you can lose money.
Sources and review date
- Bill Schultheis, "The Coffeehouse Investor". Book not consulted directly
- Bogleheads wiki, "Lazy portfolios" · accessed October 10, 2026
- Portfolio Charts, "Coffeehouse Portfolio" · accessed October 10, 2026
Page last reviewed on October 11, 2026; figures and signal are recalculated at every monthly close (latest: September 30, 2026). How we work: editorial policy and methodology.
Educational and informational content. It is not investment advice or a personal recommendation. The results shown are historical simulations (backtests) using US-listed ETFs; past performance does not guarantee future results and you may lose some or all of the capital invested. Real returns will depend on your costs, taxes, currency and execution timing.