Ben Felix Model Portfolio (Rational Reminder, ETFs, Performance, Returns Analysis)

Ben (Benjamin) Felix is a portfolio manager at PWL Capital in Canada, who is well-known for his YouTube channel, Common Sense Investing, and his podcast, Rational Reminder. He is widely recognized for his expertise in the field of investing and financial management and has created a model portfolio, the Ben Felix Model Portfolio. Let’s take a look at the Ben Felix Model Portfolio.

The Ben Felix Model Portfolio, developed by Ben Felix and Cameron Passmore of PWL Capital, is a globally diversified investment strategy that utilizes index funds and tilts towards specific factors, such as Size, Value, and Profitability, for added potential returns.

In this post, we take a look at Ben Felix Model Portfolio. We end the article with a backtest of the strategy (as a matter of fact, we make several backtests).

Related reading: – Looking for an investment strategy?

Overview of Ben Felix’s Model Portfolio

The Ben Felix Model Portfolio is a globally diversified investment strategy that utilizes index funds and tilts towards specific factors, such as size, value, and profitability (factor investing). It is developed by Ben Felix and Cameron Passmore of PWL Capital, a Canadian financial management firm.

The portfolio is designed to provide investors with a diversified investment strategy that is based on academic research and data analysis. It comprises several different asset classes, including domestic and international stocks, and sometimes, bonds. But it is achieved using index funds. It is diversified across different sectors, geographies, and market capitalizations.

The model portfolio employs a number of different investment strategies, including value investing, momentum investing, and factor-based investing. These strategies are based on academic research and are designed to exploit market inefficiencies and identify undervalued assets.

Ben Felix believes that there is a tradeoff between simplicity and optimization in index investing, and the portfolio is designed to balance this. By using the data from the Fama-French 5 Factor Model, the portfolio aims to improve expected returns by diversifying across not just geographic regions but also different risk factors. This approach offers a globally diversified index exposure while also making small adjustments to increase exposure to these factors.

In addition to the model portfolio, PWL Capital also provides clients with a number of other services, such as financial planning, tax planning, and estate planning, as well as educational resources, such as articles, videos, and webinars, to help investors better understand the market and make more informed investment decisions.

Benefits of Investing in Ben Felix’s Model Portfolio

Some of the benefits of investing in Ben Felix’s Model Portfolio include:

  • Diversification: The model portfolio is diversified across different asset classes, sectors, geographies, and market capitalizations, which helps to reduce overall risk and provide a more stable return over time.
  • Data-driven: The portfolio is based on academic research and data analysis, providing investors with a well-researched and evidence-based investment strategy. The portfolio are backtested.
  • Factor-based investing: The model portfolio employs factor-based investing, which is based on the idea that certain characteristics, such as size and value, are associated with higher returns.
  • Global exposure: The portfolio aims to provide investors with globally diversified index exposure, which can help to increase potential returns.
  • Robustness: By using the data from the Fama-French 5 Factor Model, the portfolio aims to improve expected returns by diversifying across not just geographic regions but also different risk factors, which makes the portfolio more robust.
  • Low-cost: As the portfolio is based on index funds it is cost-effective, and the costs are significantly lower than actively managed funds.
  • Low-maintenance: Because the portfolio is based on index funds, it requires very little maintenance, which makes it suitable for those who prefer a hands-off approach to investing.

As with any portfolio, don’t blindly invest in the portfolio without considering your personal circumstances, investing goals, risk tolerance, and so on. Do your due diligence as always and consider consulting a financial advisor.

Key Components of Ben Felix’s Model Portfolio

Ben Felix and PWL Capital are based in Canada, so he created a model portfolio that primarily utilizes Canadian index funds. OptimizedPortfolio.com suggests that the portfolio allocation is as follows:

  • 30% invested in iShares Core S&P/TSX Capped Composite ETF – XIC
  • 30% invested in Vanguard US Total Market ETF – VUN
  • 10% invested in Avantis U.S. Small Cap Value ETF – AVUV
  • 16% invested in iShares Core MSCI EAFE IMI Index ETF – XEF
  • 6% invested in Avantis International Small Cap Value ETF – AVDV
  • 8% invested in iShares Core MSCI Emerging Markets IMI Index ETF – XEC

For U.S. and international investors, the portfolio can, for example, be as follows:

  • 30% invested in the U.S. stock market (VTI)
  • 45% invested in developed international markets (VEA)
  • 10% US small cap value (VIOV/DLS)
  • 5% International small-cap (FNDC/ISCV)
  • 10% Emerging markets (EEM)

It’s important to note that this is a 100/0 (100% stocks, 0% bonds) version of the portfolio. For investors who desire more bond exposure, the stock holdings can be scaled back accordingly. For example, here’s how an 80/20 allocation would look like for an US or international investor:

  • 25% invested in the U.S. stock market (VTI)
  • 35% invested in developed international markets (VEA)