7Twelve (Israelsen)
7Twelve Portfolio
Where it stands today
Our calculation, 1984-02 – 2026-09
Growth of $10,000
Where it came from
Craig Israelsen is a researcher and teacher in personal financial planning (Utah Valley University now; Brigham Young and the University of Missouri-Columbia earlier). His own site says he developed the 7Twelve model in 2008. A UVU news item says he designed it after the 2008 financial crisis, when many clients suffered heavy losses, and offers it as the diversified 'core' of an investor's money. The White Coat Investor review (Feb 2012) also dates the debut to 2008.
The name is a count: 7 broad asset categories (US stock, non-US stock, real estate, resources, US bonds, non-US bonds, cash) filled by 12 funds. In the core model all 12 funds get the same weight, 8.33% each, restored by periodic rebalancing. The author's own 2026 introduction describes this as the 'core' model and also lists three age-based versions that cut the eleven non-cash funds to 6.67%, 5% or 3.33% each and put the rest in cash (26.67%, 45% or 63.33%).
The book '7Twelve: A Diversified Investment Portfolio with a Plan' was published by John Wiley & Sons in 2010. A later book, 'Start Investing Now', came out in 2018. The model is a registered trademark of Israelsen, who states he does not manage money for anyone.
The design philosophy is breadth: 8 of the 12 funds are equity or diversifying assets (65% of the portfolio per the author's chart, 67% equity-like by his Table 2 count) and 4 are fixed income or cash (35%). Real estate, natural resources and commodities are included on the argument that they diversify stocks and bonds. The author states a long-run design target of about a 7% return with about 12% standard deviation.
Israelsen publishes monthly performance updates for several implementations: an index-based (non-investable) benchmark, an 'active' version of actively managed funds, a passive ETF version and Vanguard, Fidelity and Schwab fund versions.
What is in it
| Large US stock | 8.3% | index used for benchmark: S&P 500 |
| Mid cap US stock | 8.3% | S&P MidCap 400 |
| Small cap US stock | 8.3% | S&P SmallCap 600 |
| Non-US developed stock | 8.3% | MSCI EAFE |
| Non-US emerging stock | 8.3% | MSCI EM |
| Real estate | 8.3% | S&P Global REIT |
| Natural resources | 8.3% | S&P North American Natural Resources |
| Commodities / clean energy | 8.3% | DBIQ Optimum Yield Diversified Commodity (excess return) |
| US bonds | 8.3% | Bloomberg US Aggregate |
| Inflation-protected bonds (TIPS) | 8.3% | Bloomberg US TIPS |
| Non-US (international) bonds | 8.3% | Bloomberg Global Treasury |
| Cash | 8.3% | 90-day T-bill |
How we model it
| Commodities | 16.7% |
| US bond market (aggregate) | 16.7% |
| US large companies (S&P 500) | 12.5% |
| US small companies | 12.5% |
| Developed markets outside the US | 8.3% |
| Emerging markets | 8.3% |
| Real estate (REITs) | 8.3% |
| Inflation-protected bonds (TIPS) | 8.3% |
| Cash (Treasury bills) | 8.3% |
For a euro investor
How to build it with European funds
| Part | Share | Example funds (ISIN) |
|---|---|---|
| Commodities | 16.7% | iShares Diversified Commodity Swap UCITS ETF IE00BDFL4P12 |
| US bond market (aggregate) (closest match) | 16.7% | iShares Core Global Aggregate Bond UCITS ETF EUR Hedged (Acc) IE00BDBRDM35iShares Core Global Aggregate Bond UCITS ETF USD (Dist) IE00B3F81409 |
| US large companies (S&P 500) | 12.5% | iShares Core S&P 500 UCITS ETF USD (Acc) IE00B5BMR087Vanguard S&P 500 UCITS ETF (USD) Distributing IE00B3XXRP09 |
| US small companies | 12.5% | SPDR Russell 2000 U.S. Small Cap UCITS ETF IE00BJ38QD84iShares MSCI USA Small Cap ESG Enhanced CTB UCITS ETF USD (Acc) IE00B3VWM098 |
| Developed markets outside the US (closest match) | 8.3% | iShares Core MSCI Europe UCITS ETF EUR (Acc) IE00B4K48X80iShares Core MSCI Japan IMI UCITS ETF IE00B4L5YX21 |
| Emerging markets | 8.3% | iShares Core MSCI Emerging Markets IMI UCITS ETF (Acc) IE00BKM4GZ66 |
| Real estate (REITs) | 8.3% | iShares US Property Yield UCITS ETF IE00B1FZSF77iShares Developed Markets Property Yield UCITS ETF IE00B1FZS350 |
| Inflation-protected bonds (TIPS) | 8.3% | iShares USD TIPS UCITS ETF USD (Acc) IE00B1FZSC47 |
| Cash (Treasury bills) | 8.3% | Xtrackers II EUR Overnight Rate Swap UCITS ETF 1C LU0290358497iShares USD Treasury Bond 0-1yr UCITS ETF (Acc) IE00BGSF1X88 |
The idea
Spread money equally across 12 sources of return, drawn from seven categories, so that no single market decides the outcome, and rebalance mechanically to sell what rose and buy what fell. Real assets (real estate, natural resources, commodities) are added because they behaved differently from stocks and bonds in some periods.
How people buy it
Mutual funds or ETFs, one per slice. The author shows index-based, active, passive ETF, Vanguard (mutual funds and ETFs), Fidelity and Schwab versions in his performance update. ETF examples from third-party replications: VV, IJH, VIOO, VEA, VWO, VNQ, DBC or GSG, BND, VTIP, BNDX, BIL (not the author's list).
Rebalancing as published
Back to equal weights periodically. The author's site says annually, quarterly or monthly are all possible; his 2026 performance table is calculated with monthly rebalancing and his performance table of December 2025 with annual rebalancing.
Variants
- Age-Based 50-60: 6.67% in each of eleven funds, 26.67% cash (53% equity, 47% bonds/cash).
- Age-Based 60-70: 5% in each of eleven funds, 45% cash (40% equity, 60% bonds/cash).
- Age-Based 70+: 3.33% in each of eleven funds, 63.33% cash (27% equity, 73% bonds/cash).
- Third-party replications on fewer assets (for example Portfolio Charts uses 9 or 11 proxies: US intermediate Treasuries for TIPS, commodities for natural resources; weights rounded, so not equal).
Criticism
- White Coat Investor (2012) dislikes the large commodities exposure (natural resources plus commodities, about one sixth): expensive, complex and illiquid products, and collateralised futures have returned about the same as T-bills so the case rests on correlations.
- Same review: foreign bonds were a new recommendation with few cheap funds (about 0.4% expense ratio then); currency hedging cost was raised in a comment.
- Same review: the US side tilts to small caps but the international side does not, and there is no value tilt, which the reviewer finds inconsistent with the book's own argument.
- The author's own 28-year returns (6.4% to 7.5% a year, Table 1) are well below the 10% long-run US stock return, so the model trades return for smoothness (my reading of his table).
Through the eras
| Era | Dates | Total | Per year | Worst drop | S&P 500 |
|---|---|---|---|---|---|
| Black Monday | 1987-08 – 1987-12 | −12.1 % | — | −15.4 % | −21.8 % |
| Savings-and-loan crisis and 1990 recession | 1990-07 – 1991-03 | +6.8 % | — | −4.2 % | +7.4 % |
| 1994 bond market massacre | 1994-02 – 1994-12 | −1.9 % | — | −4.5 % | −3.2 % |
| Asian and Russian financial crises | 1997-07 – 1998-10 | +0.2 % | +0.2 % | −12.8 % | +22.4 % |
| Dot-com bubble and crash | 2000-03 – 2002-10 | −2.1 % | −0.8 % | −11.2 % | −37.2 % |
| Recovery and housing boom | 2002-11 – 2007-09 | +120.5 % | +17.5 % | −3.9 % | +97.0 % |
| Global financial crisis | 2007-10 – 2009-03 | −29.1 % | −20.5 % | −37.5 % | −44.7 % |
| The decade after the crisis | 2009-04 – 2019-12 | +155.8 % | +9.1 % | −14.0 % | +411.2 % |
| Fourth-quarter 2018 sell-off | 2018-09 – 2018-12 | −10.5 % | — | −10.5 % | −14.4 % |
| Covid crash and stimulus boom | 2020-02 – 2021-12 | +30.5 % | +14.9 % | −16.8 % | +53.6 % |
| Inflation shock and rate hikes | 2022-01 – 2022-12 | −10.8 % | −10.8 % | −15.1 % | −19.9 % |
Calendar years
Any N-year period
| Any N-year period | Worst | 10 % worse than | Median | 10 % better than | Best |
|---|---|---|---|---|---|
| 1 y (501) | −33.6 % | −3.2 % | +10.4 % | +21.2 % | +45.6 % |
| 3 y (477) | −6.2 % | +2.1 % | +9.0 % | +14.5 % | +22.1 % |
| 5 y (453) | +1.1 % | +4.3 % | +8.7 % | +12.7 % | +18.1 % |
| 10 y (393) | +3.8 % | +5.1 % | +8.9 % | +11.0 % | +12.6 % |
| 15 y (333) | +4.5 % | +6.2 % | +8.7 % | +10.9 % | +11.7 % |
| 20 y (273) | +6.0 % | +6.7 % | +8.6 % | +10.7 % | +11.5 % |
| 30 y (153) | +7.4 % | +7.8 % | +8.5 % | +9.5 % | +10.3 % |
How it behaved in history
- 1998-1999. The index-based 7Twelve returned +1.56% in 1998 and +16.84% in 1999 (author's table). www.7twelveportfolio.com
- 2000-2002 (dot-com bust). The index-based benchmark was positive in 2000 (+5.42%) and slightly negative in 2001 (-2.09%) and 2002 (-0.56%), while US stocks fell. Active versions did better (+11.21%, +2.98%, +2.18%). Real estate, commodities and bonds were the cushion, in the author's framing. www.7twelveportfolio.com
- 2008. Index-based 7Twelve -25.49%; the investable versions -25.16% to -30.84% (active -28.14%, Schwab -25.89%, Fidelity -30.84%). The model is not defensive in a global equity crash: it holds about 67% equity-like assets and commodities and real estate fell too. 2009 rebound +25.64% (index). www.7twelveportfolio.com
- 2022. Index-based -7.71% but the investable versions lost much more: Active -18.60%, Passive ETF -14.02%, Vanguard mutual-fund version -11.43%, Vanguard ETF -12.52%, Fidelity -15.59%, Schwab -16.10%. The big gap between the index and the funds in 2021 and 2022 (for example 2021 +16.85% index vs +5.28% active) shows implementation matters (my reading of the author's table). www.7twelveportfolio.com
- 1929-1982. No published results for the model before 1970 (the author's long histories start in 1970; his first page lists fund types with records back to 1970). The pre-1970 behaviour of the classes cannot be cited from his work. www.uvu.edu
Published results (by others)
- Author's index-based 7Twelve benchmark: calendar-year returns 1998-2025 and annualised returns (1998-2025): 25-year annualised 6.88%, 28-year 6.98%; 25-year standard deviation of annual returns 11.61% (index-based, not investable) www.7twelveportfolio.com
- Investable versions are close to the index benchmark over 25 years (2001-2025): Active 6.87%, Passive ETF 6.21%, Vanguard mutual-fund version 6.89%, Vanguard ETF 6.90%, Fidelity 7.38%, Schwab 6.55% a year www.7twelveportfolio.com
- Author's backtest of an equal-weight portfolio of the seven asset classes (before expenses) (1970-2010): 10.52% a year; worst year -27.59% in 2008 (as reported in a 2012 review) www.whitecoatinvestor.com
- Columnist Scott Burns reported a 7.52% annualised return over the previous 10 years versus 2.64% for the Vanguard Balanced Index fund (10 years to about 2017 (exact dates not given)): 7.52% vs 2.64% www.uvu.edu
- Retirement test: $250,000 on 1 Jan 2001, 5% first-year withdrawal rising 3% a year for 25 years (2001-2025): Core model balances at end-2025: Active $409,209, Passive ETF $264,692, Vanguard mutual fund $350,049, Fidelity $440,719, Schwab $317,569; Vanguard 500 Index ran out in year 23 www.7twelveportfolio.com
What we could not verify
- The index list comes from the monthly performance PDF, the fund-by-fund list from the introduction PDF. The introduction PDF lists 'Commodities/Clean Energy' as one slice; older descriptions call it 'commodities'. The 12 slices are the same in both documents.
- The exact date of first publication in 2008 (article, report or website launch) is not found; I have only 'developed in 2008' from the author's PDFs and 2008 from the review of 2012.
- The 1970-2010 backtest of 10.52% a year comes from a secondary review (White Coat Investor); it says seven asset classes equal-weighted, not 12 funds, and the original source was not reached.
- The Burns 7.52% vs 2.64% figures come from a university news item and the dates are not stated.
- I did not read the book, so any pre-1970 history it may contain is not covered here.
- Third-party pages (Portfolio Charts, MyPlanIQ) show unequal weights or 11-class variants; these are proxies for tool limits, not the author's allocation.
Sources
- www.7twelveportfolio.com
https://www.7twelveportfolio.com/Downloads/7Twelve-Model-Intro.pdf - www.7twelveportfolio.com
https://www.7twelveportfolio.com/Downloads/PerformanceUpdate.pdf - www.7twelveportfolio.com
https://www.7twelveportfolio.com/ - www.7twelveportfolio.com
http://www.7twelveportfolio.com/AboutUs.shtml - www.uvu.edu
https://www.uvu.edu/news/newsarchive/2017/september/7twelveportfolio.html - www.whitecoatinvestor.com
https://www.whitecoatinvestor.com/the-7twelve-portfolio/ - portfoliocharts.com
https://portfoliocharts.com/portfolio/7twelve-portfolio - portfoliocharts.com
https://portfoliocharts.com/2017/03/03/the-7twelve-portfolio-and-the-power-of-broad-diversification/
Calculated on historical data. Past results do not predict the future. Models before the 1990s use stand-ins for classes that had no index yet; fees, taxes and fund costs are not included. This is mathematics, not an investment recommendation.