Performance & Risk Metrics (2016-2026)
| Metric | Adaptive Asset Allocation | Larry Portfolio |
|---|---|---|
| CAGR (10-Year Annualized Return) | 11.5% | 9.1% |
| Max Drawdown | -19.8% | -24.5% |
| Sharpe Ratio (Risk-Adjusted Return) | 0.71 | 0.52 |
| Strategy Type | Tactical Asset Allocation (Momentum + Volatility) | Passive Portfolio (Factor Tilted) |
| Rebalancing Frequency | Monthly | Annually (fixed target weights) |
Adaptive Philosophy
The Adaptive Allocation strategy dynamically adjusts weights across multiple asset classes based on recent momentum and volatility. Unlike fixed-weight portfolios, it increases allocation to trending assets while reducing exposure to volatile or weakening ones. This creates a continuously evolving portfolio that adapts to changing market conditions.
Larry Portfolio Philosophy
Larry Swedroe's factor-tilted portfolio concentrates equity exposure in small-cap value stocks globally, while holding only safe short-term bonds. This aggressive factor bet aims for the highest expected equity returns by harvesting the Size and Value premiums, while keeping bond duration short to minimize interest rate risk.
Key Differences Explained
Both target above-market returns but through opposite approaches. The Adaptive strategy uses tactical timing across diversified assets, while the Larry Portfolio makes a concentrated passive factor bet on small-cap value. The Adaptive achieves higher CAGR (11.5% vs 9.1%) with dramatically lower drawdowns (-15.3% vs -24.5%).
- Strategy Type: Adaptive is a tactical, actively-managed approach. Larry Portfolio is a passive, buy-and-hold approach.
- Return vs Risk: Adaptive delivered 11.5% CAGR with -15.3% max drawdown (Sharpe: 0.78). Larry Portfolio delivered 9.1% CAGR with -24.5% max drawdown (Sharpe: 0.52).
- Maintenance: Adaptive requires monthly signal monitoring. Larry Portfolio needs only annual rebalancing.
Side-by-Side Pros and Cons
Adaptive Strengths & Limits
- Dynamically adapts to changing market regimes
- Multi-asset diversification with momentum overlay
- Volatility-weighting reduces exposure to turbulent assets
- Most complex strategy to implement
- Higher turnover means more taxable events
- Can underperform in sudden V-shaped recoveries
Larry Portfolio Strengths & Limits
- Highest expected returns from documented factor premiums
- Short-term bonds eliminate interest rate risk
- Academically grounded in Fama-French research
- Deep drawdowns from concentrated equity factor exposure
- Value factor can underperform growth for decades
- Requires strong conviction to hold through long underperformance
Which Strategy is Right For You?
Choose Adaptive if: You want strong returns with managed risk. The Adaptive strategy's tactical approach provides crash protection that the Larry Portfolio completely lacks.
Choose Larry Portfolio if: You have extreme conviction in academic factor premiums and a 20+ year horizon. The Larry Portfolio's concentrated value bet requires patience but is grounded in robust research.