7Twelve Portfolio: backtest, returns and drawdowns
Seven asset classes in twelve funds, each held at an equal one-twelfth.
Data updated October 2026
Created by: Craig Israelsen (2008)
Allocation
| Asset class | ETF used in the backtest | Weight |
|---|---|---|
| US large caps | IVV | 8.3% |
| US mid caps | IJH | 8.3% |
| US small caps | IJR | 8.3% |
| International developed stocks | EFA | 8.3% |
| Emerging-market stocks | EEM | 8.3% |
| US real estate (REITs) | IYR | 8.3% |
| Natural-resource companies | IGE | 8.3% |
| Broad commodities | DBC | 8.3% |
| US aggregate bonds | AGG | 8.3% |
| Inflation-protected Treasuries (TIPS) | TIP | 8.3% |
| International government bonds | BWX | 8.3% |
| Treasury bills (cash) | BIL | 8.3% |
- Stocks 58.3%
- Bonds 25%
- Cash 8.3%
- Commodities 8.3%
From October 2011 to October 2026 the 7Twelve Portfolio returned 6.5% a year on average, with annual volatility of 10.8%. Its deepest fall was 26.2%, from January 2020 to March 2020, recovered in about 10 months.
Its best year was 2021 (+16.8%) and its worst 2022 (−8.3%).
Over the same period 100% US stocks returned 14.3% a year with a maximum fall of 35.0%.
Key figures
- Annual return (CAGR)
- +6.5%
- Annual volatility
- 10.8%
- Maximum drawdown
- −26.2%
- Recovery time
- 10 months
- Sharpe
- 0.50
- Sortino
- 0.69
- Worst year
- 2022: −8.3%
- Positive years
- 11/14
Growth of $10,000
Drawdowns
Returns by calendar year
| Year | 7Twelve Portfolio | 60/40 Portfolio | 100% Stocks |
|---|---|---|---|
| 2026(partial) | +12.2% | +6.9% | +12.7% |
| 2025 | +12.9% | +13.0% | +17.0% |
| 2024 | +6.2% | +14.8% | +23.8% |
| 2023 | +9.4% | +17.9% | +26.1% |
| 2022 | −8.3% | −16.9% | −19.5% |
| 2021 | +16.8% | +14.6% | +25.7% |
| 2020 | +5.2% | +15.4% | +20.7% |
| 2019 | +16.7% | +21.9% | +30.7% |
| 2018 | −7.8% | −3.1% | −5.3% |
| 2017 | +12.1% | +14.2% | +21.4% |
| 2016 | +11.1% | +8.3% | +12.1% |
| 2015 | −6.7% | +0.2% | −0.1% |
| 2014 | +1.0% | +9.7% | +12.2% |
| 2013 | +9.7% | +18.2% | +31.8% |
| 2012 | +10.3% | +10.4% | +14.7% |
| 2011(partial) | +2.3% | +3.1% | +4.1% |
History
- Created by
- Craig Israelsen
- Who
- Professor of personal finance and portfolio designer
- Year
- 2008
- Source
- 7Twelve: A Diversified Investment Portfolio with a Plan (2010)
- Funds in the backtest
- 12
Craig Israelsen, a professor of personal finance, designed the 7Twelve portfolio in 2008 and described it in his 2010 book: seven asset classes split into twelve funds, each held at an equal 1/12 – about 8.3%.
The seven classes are US stocks (large, mid and small), non-US stocks (developed and emerging), real estate, resources (natural-resource companies and commodities), US bonds (aggregate and inflation-protected), non-US bonds and cash. Equal weights and regular rebalancing stop the portfolio from concentrating in whatever has done best recently.
Strengths and weaknesses
Strengths
- Twelve funds across seven asset classes: very broad diversification
- Equal weights avoid concentration in recent winners
- Includes inflation-linked bonds, resources and cash
Weaknesses
- Twelve funds to buy and rebalance
- Resources and commodities dragged on returns in some long periods
- Equal weights give small and emerging markets more weight than their market size
How it works
Diversify as widely as possible and give every fund the same weight, so the portfolio never concentrates in recent winners.
Backtest with total-return ETF prices (dividends reinvested), rebalanced to target weights on the first trading day of each year. Where a Vanguard fund has a short price history in our data, an iShares fund on the same market is used (for example ITOT for VTI, IVV for VOO). No fees, taxes or currency effects; first and last years are partial. Past results do not predict future returns.
Questions
Who created the 7Twelve Portfolio?
Craig Israelsen (professor of personal finance and portfolio designer), 2008. Source: 7Twelve: A Diversified Investment Portfolio with a Plan (2010).
What is the 7Twelve Portfolio?
Seven asset classes in twelve funds, each held at an equal one-twelfth. Allocation: 8.3% us large caps, 8.3% us mid caps, 8.3% us small caps, 8.3% international developed stocks, 8.3% emerging-market stocks, 8.3% us real estate (reits), 8.3% natural-resource companies, 8.3% broad commodities, 8.3% us aggregate bonds, 8.3% inflation-protected treasuries (tips), 8.3% international government bonds, 8.3% treasury bills (cash). Created by: Craig Israelsen (2008).
What is the 7Twelve Portfolio return?
In the backtest from October 2011 to October 2026 it returned 6.5% a year on average, with a maximum drawdown of 26.2%. US dollars, before fees and taxes.
How often should it be rebalanced?
The backtest rebalances once a year back to the target weights. Rebalancing more often changes little and adds costs; some investors rebalance only when a weight drifts beyond a threshold.
What was the worst drawdown of the 7Twelve Portfolio?
26.2%, from January 2020 to March 2020; it took about 10 months to get back to the previous high.
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Source: MarketStack end-of-day prices. Historical and educational content: not a forecast and not investment advice. MEDGE Capital does not recommend buying or selling any instrument. Risk disclaimer.