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7Twelve: A Diversified Investment Portfolio with a Plan Hardcover – August 9, 2010

ISBN-13: 978-0470605271 ISBN-10: 0470605278 Edition: 1st

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Product Details

  • Hardcover: 204 pages
  • Publisher: Wiley; 1 edition (August 9, 2010)
  • Language: English
  • ISBN-10: 0470605278
  • ISBN-13: 978-0470605271
  • Product Dimensions: 9.4 x 5.9 x 0.8 inches
  • Shipping Weight: 12.8 ounces (View shipping rates and policies)
  • Average Customer Review: 4.4 out of 5 stars  See all reviews (25 customer reviews)
  • Amazon Best Sellers Rank: #384,170 in Books (See Top 100 in Books)

Editorial Reviews

Review

“Craig Israelsen has an interesting idea: Let's leave 1950 behind. The associate professor at Brigham Young University<http://topics.dallasnews.com/topic/Brigham_Young_University> in Utah<http://topics.dallasnews.com/topic/Utah> thinks it's time to include the world outside the United States, among other things, in our investments rather than just talk about it . . . . This is accomplished with what Israelsen dubs the ‘7Twelve Balanced Fund.’ Rather than just domestic stocks and bonds, the new benchmark has seven asset classes. Those asset classes, in turn, are subdivided into a dozen subsets, all held in equal amounts. The payoff is huge. Over the last 10 years, his better balanced index provided a return of 7.52 percent annualized. The Vanguard Balanced Index fund did better than nearly 60 percent of its managed competitors but returned only 2.64 percent over the same period. That 7.52 percent return would have ranked Israelsen's passive index in the top 2 percent of all moderate allocation funds. Indeed, it would have ranked in the top 30 percent of all world allocation funds - funds that do invest in a broader menu of assets . . . . This is no guarantee of investment nirvana, but it's a good start for a new millennium.”—Scott Burns, Syndicated Columnist, Dallas Morning News (March 27, 2010)

From the Inside Flap

While most investors would agree that diversified, low-cost investing makes great sense for everyone, the reality is that the average investor has very little experience building a diversified investment portfolio. Most investors end up cobbling a few different mutual funds together, resulting in a portfolio that lacks true diversification. 7Twelve shows you how to build a diversified, multi-asset portfolio using "7" core asset classes (or investment categories) by utilizing "Twelve" underlying mutual funds.

Author Craig Israelsen clearly explains just how easy it is to manage a successful portfolio with a plan, rather than managing your money piecemeal. His three key guidelines in the 7Twelve recipe are deceptively simple: select 12 different ingredients (such as mutual funds), allocate your investment equally among all 12 funds, and rebalance the 12 funds on a periodic basis, such as annually. Israelsen describes in straightforward and ready-to-apply terms what your portfolio should look like and outlines how to make it a reality for you. In 15 succinct chapters, he takes you step by step through the process of building and managing a portfolio that optimizes performance and minimizes risk. He begins by demonstrating how diversification is actually achieved and introduces various ways to meaningfully measure portfolio performance. He then outlines how to actually build and manage the 7Twelve portfolio—from periodic rebalancing to changes in the asset allocation over the life cycle—and specifically addresses the all-important issue of portfolio durability during the retirement years. Israelsen also presents research that sheds light on some of the most-debated topics among investors: value versus growth, active versus passive investing, and some of the perplexing problems in many target- date mutual funds.

Better risk-adjusted performance is the key benefit of building broadly diversified investment portfolios, and only by combining a wide variety of asset classes can an investment portfolio produce superior performance with lower levels of risk. The 7Twelve approach provides diversification depth within each separate mutual fund, and diversification breadth across the 7 asset classes—a recipe that provides ideal risk-controlled performance.


More About the Author

Craig L. Israelsen, Ph.D., is an Associate Professor at Brigham Young University in Provo, Utah where he teaches Personal and Family Finance to over 1,200 students each year.

He holds a Ph.D. in Family Resource Management from Brigham Young University. He received a B.S. in Agribusiness and a M.S. in Agricultural Economics from Utah State University. Prior to teaching at BYU, he was on the faculty of the University of Missouri-Columbia for 14 years where he taught Personal and Family Finance in the Personal Financial Planning Department.

Primary among his research interests is the analysis of mutual funds and the design of investment portfolios. He writes monthly for Financial Planning Magazine and is a regular contributor to the Journal of Indexes and Horsesmouth.com. His research has also been published in the Journal of Financial Planning, Journal of Asset Management (U.K.), Journal of Performance Measurement, Asia Financial Planning Journal (Singapore), Journal of Family and Economic Issues, and Financial Counseling and Planning.

His research has been cited in the Christian Science Monitor, Wall Street Journal, Newsweek, Forbes, Smart Money Magazine, Kiplinger Retirement Report, Advisor Perspectives, Dow Jones Market Watch, Family Circle Magazine, and Bottom Line Personal.

He is a principal at Target Date Analytics LLC (www.OnTargetIndex.com), a firm that has developed indexes for the benchmarking and evaluation of target date/lifecycle funds. He is also the developer of the 7Twelve Portfolio (www.7TwelvePortfolio.com) and the author of three books. His most recent book is titled: "7Twelve: A Diversified Investment Portfolio with a Plan" (John Wiley & Sons, 2010).

He is married to Tamara Trimble. They have seven children (Sara, Andrew, Heidi, Mark, Nathan, Emma, Jared). Hobbies include running, biking, swimming, woodworking, and family vacations. He has competed in the Boston Marathon 5 times, but has never won.

Customer Reviews

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Every investor and advisor should read this book!
Brent Goers
The book is very well written and is targeted to the financial layman--in concepts (like recipes) that are easy to understand.
Amazon Customer
This book gives a simple but effective strategy for diversification using low cost index funds.
Jonathan Koomey

Most Helpful Customer Reviews

15 of 17 people found the following review helpful By Brent Goers on August 14, 2010
Format: Hardcover Verified Purchase
I thought I knew everything about diversification until I read Craig Israelsen's book, "7Twelve: A Diversified Investment Portfolio With A Plan." Wow! This book is a groundbreaking approach to portfolio construction based on historical performance patterns of indexes, mutual funds and ETFs. The 7Twelve Portfolio takes asset allocation to another level! Important concepts are highlighted and supported throughout the book with tables, charts, etc. The book also shows you how to use the 7Twelve Portfolio as either a pre-retirement accumulation portfolio or a post-retirement distribution portfolio. Craig has a gift for explaining sophisticated concepts in a clear and simple way. If you want to build a balanced, multi-asset portfolio that can help you grow your money as well as protect it, 7Twelve is the recipe you need. Every investor and advisor should read this book!
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12 of 14 people found the following review helpful By T. Hartley on January 15, 2011
Format: Hardcover
Overall, this is a good book about the benefits of diversification and how to apply it in your own investing. However, I was surprised the author was slightly inconsistent with his own investment philosophy.

For example, the author persuades you the 7Twelve investment philosophy is superior because historical returns/risks say so. Additionally, there is a section in the book where he compares past returns/risks between a 7Twelve "passive" strategy (using index mutual funds) vs. the 7Twelve "active" strategy (using actively managed mutual funds). According to the author's own data, the "active" 7Twelve strategy consistently resulted in superior returns than the "passive" 7Twelve strategy (with comparable risk as well).

Ironically, the author still stated he prefers implementing the 7Twelve portfolio using index funds (passively managed). I found this strange since the author bases his arguments entirely off past returns, yet the historic evidence presented suggests the active strategy is superior. This inconsistency was a disappointment, and it makes me wonder why the author doesn't stick to his guns on "what the data show."
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9 of 10 people found the following review helpful By Michael Klein on August 29, 2010
Format: Hardcover Verified Purchase
Israelsen's book excels in exposition...it's easy and fun to read...and in substance...he presents the best, easy-to-implement asset allocation models I have seen in over twenty years as a professional investment manager. His research is compelling and clearly presented. Although I am a tactical asset allocator and have produced returns that significantly exceed his static approach, I am so impressed with his work that our firm has designed our next 401k plan so the participants can implement his approach.

This is a must read for anyone interested in managing their own (or others) mutual fund portfolio.
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6 of 6 people found the following review helpful By BillyBob on July 17, 2011
Format: Hardcover Verified Purchase
Highly effective in beating the S & P 500 with about half the risk. Simple in design, requires only one tune-up per year. Very few moving parts. I've been investing since 1989, and I learned more in the first 80 pages than I ever knew. If one has never made an investment in their life this book directs one down a very easy to understand path that can lead to a care-free retirement. Along one's journey make one movement a year called "rebalancing". Don't worry about alphas, betas, standard deviation, category rankings, upside & downside capture ratios, p/e ratios, and etc. Book is written in a easy to understand "cookbook" format. The results are powerful: the ability to understand what you are doing and why. and one moving part per year of execution. It's a highly effective, easy to understand tool with only one action required per year. Diversification and having a plan that you understand are the cornerstones of your retirement. This plan forces one to sell high and buy low...what a novel idea!!!
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8 of 9 people found the following review helpful By Christine Haenssler, Boston, Ma. on August 29, 2010
Format: Hardcover Verified Purchase
I waited with great anticipation for "7 Twelve" to come out. It has surpassed all my expectations.
I could hug Craig Israelsen for his clear and easily understandable path to a sound investment plan.
The proof of the pudding shows in his thorough research of a 40 year market history. I never thought statistics
could be that exciting!
I have redone my whole Vanguard portfolio and said bye-bye to CNBC forever
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7 of 8 people found the following review helpful By Jim G on December 15, 2010
Format: Hardcover
My financial adviser fully committed to using the 7Twelve investment philosophy last year after a year or so of partial adherence to the 7Twelve principals. He recommended that I read the book so that I could understand what he was doing and appreciate how he managed to achieve 17% gains this year on top of similar gains last year. I am currently on my 3rd reading of the book and am still picking up useful information. Since retiring 3 years ago I made a commitment to understand and become more active with my investments and have taken investment classes, read many newsletters, magazine articles and six books on investments and/or trading. This book is the best information that I have encountered to date. The concept is simple and easily implemented and the writer presents the information in a very understandable format and backs up all of his conclusions with reams of charts and data. The only caveat that I would present is the standard well worn "past performance does not guarantee future performance". He has selected 12 different types of funds that historically prove his concept over all the 3 year and 10 year periods from 1970 through 2009. Will these same 12 funds provide similar results in the future or will a different blend of funds provide a better result? I will provide a followup review in 10 years.
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