Bill Schultheis Coffeehouse Portfolio: Allocations, Performance, and Returns Analysis
The Coffeehouse Portfolio from Bill Schultheis aims to diversify investments across stocks, REITs, and bonds.
The Schultheis Coffeehouse Portfolio strategy can be implemented with 9 ETFs. You do not need to pick individual stocks and bonds.
Accordingly to our backtests over the past 16 years, the Schultheis Coffeehouse Portfolio has the following performance metrics:
• Compound annual return (CAR): 5.97%;
• Standard deviation: 13.54%;
• Maximum drawdown (MDD): –38.39%;
• Sharpe ratio (with a risk-free rate of 3%): 0.22;
• CAR/MDD ratio: 0.16.
Who Is Bill Schultheis
Schultheis grew up on a wheat farm in eastern Washington, attended Washington State University, and graduated from Texas A&M University in 1982.
In 1998 Bill Schultheis created the Coffeehouse Investor in an effort to bring a simpler and smarter investment philosophy to individuals and corporations across the nation and around the world.
He has appeared regularly on Seattle’s PBS Serious Money program, is a guest contributor on NPR’s Morning Edition and wrote a syndicated investment column for eight years.
For 13 years, he worked with retail and institutional accounts for Smith Barney in Seattle, WA. For the past eight years he has been a principal and fee-only financial adviser, currently with Soundmark Wealth Management in Kirkland, WA.
When he’s not working, he can be found on the golf course, camping on Mt. Rainier, cooking in the kitchen, writing his next book, and enjoying the company of his wonderful family and friends.
What Is The Schultheis Coffeehouse Portfolio
The Schultheis Coffeehouse Portfolio consists of the following asset classes with their respective total weights:
| Asset class | Weight in the portfolio |
| Stocks | 50.00% |
| Bonds | 40.00% |
| REITs | 10.00% |
The more detailed allocation of the Schultheis Coffeehouse Portfolio assets with appropriate weights:
| Asset Allocation | Weight |
| Large Cap Blend Stocks | 10.00% |
| Small Cap Blend Stocks | 10.00% |
| Large Cap Value Stocks | 10.00% |
| Small Cap Value Stocks | 10.00% |
| REITs | 10.00% |
| International Stocks | 10.00% |
| Bonds | 40.00% |
Stocks In The Schultheis Coffeehouse Portfolio
Stocks are used as high-return securities that increase portfolio returns, but stocks are more risky and volatile than bonds. The Schultheis Coffeehouse Portfolio includes the following types of stocks:
- Large Cap Blend Stocks – US large-cap growth and value stocks that virtually replicate the benchmark S&P 500 stock index;
- Small Cap Blend Stocks – US small cap growth and value stocks. Such stocks have historically outperformed large-cap stocks;
- Large Cap Value Stocks – US large cap value stocks. Such stocks have historically outperformed growth stocks;
- Small Cap Value Stocks – US small cap value stocks These stocks have historically outperformed growth stocks and large cap stocks;
- International Stocks – international stocks allow you to increase diversification by reducing the overall correlation of the portfolio. International stocks are located on other continents (Europe, Asia, etc) and have low correlation with US stocks.
For stocks, we have picked these ETFs, which are well diversified, have high liquidity and a long performance history:
| Portfolio Sector | ETF Name | ETF Ticker |
| Large Cap Blend Stocks | SPDR S&P 500 ETF Trust | SPY |
| Small Cap blend Stocks | iShares Core S&P Small-Cap ETF | IJR |
| Large Cap Value Stocks | Vanguard Value Index Fund |