7Twelve: A Diversified Investment Portfolio with a Plan [Hardcover]

Craig L. Israelsen (Author)

Book Description

Publication Date: August 9, 2010

A proven way to put together a portfolio that enhances performance and reduces risk

Professor Craig Israelsen of Brigham Young University is an important voice in the area of asset allocation. The reason? He keeps things simple. Now, in 7Twelve, he shows you how to do the same, and demonstrates how his approach to investing can help you grow your money as well as protect it.

7Twelve outlines a multi-asset balanced portfolio that is a logical starting point when assembling a portfolio-either as the blueprint for the entire portfolio or as a significant building block. Page by page, he will show you how to create a balanced portfolio utilizing multiple asset classes to enhance performance and reduce risk.

• Discusses how the 7Twelve portfolio includes seven core asset classes and utilizes twelve specific mutual funds or exchange traded funds
• Details the tax efficiency of this specific investment approach
• Shows you how to use the 7Twelve portfolio as a pre-retirement accumulation portfolio or a post-retirement distribution portfolio

If you want to build a well-balanced, multi-asset portfolio, 7Twelve is the book for you.

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.

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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: 6.5 x 0.8 x 9.4 inches
• Shipping Weight: 12.8 ounces (View shipping rates and policies)
• Average Customer Review: 4.3 out of 5 stars  See all reviews (17 customer reviews)
• Amazon Best Sellers Rank: #199,889 in Books (See Top 100 in Books)

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.

Most Helpful Customer Reviews

14 of 16 people found the following review helpful

5.0 out of 5 stars A recipe for investment success! August 14, 2010

By Brent Goers

Format:Hardcover|Amazon 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!

7 of 7 people found the following review helpful

3.0 out of 5 stars Good insights, but slighty inconsistent philosophy January 15, 2011

By T. Hartley

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."

7 of 8 people found the following review helpful

5.0 out of 5 stars ASSET ALLOCATION AT ITS BEST!! August 29, 2010

By Michael Klein

Format:Hardcover|Amazon 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.