Bob Clyatt Sandwich Portfolio: Allocations, Performance, and Returns Analysis

The Clyatt Sandwich Portfolio made by Bob Clyatt aims to diversify investments across stocks, REITs, bonds, and cash.

The Clyatt Sandwich Portfolio strategy can be implemented with 9 ETFs. You do not need to pick individual stocks and bonds.

According to our backtests over the past 16 years, the Clyatt Sandwich Portfolio has the following performance metrics:

• Compound annual return (CAR): 4.94%;

• Standard deviation: 11.84%;

• Maximum drawdown (MDD): 35.06%;

• Sharpe ratio (with a risk-free rate of 3%): 0.16;

• CAR/MDD ratio: 0.14.

Who Is Bob Clyatt

Bob Clyatt combines experience and insight in his leading book on early retirement advice. Bob’s extensive education in finance and economics, including degrees from Berkeley and MIT where he studied under leading Nobel-prize winning economists, combine with his artist’s idealism to forge a unique blend of pragmatism and vision for the long-term retiree.

After 20 years in the business world, including founding two start-ups sold to public companies, Bob left full-time career work at age 42 to re-connect to his family, “his sanity”, and pursue a cherished dream to write and create art.

To convince himself that he was not irresponsibly risking his family’s well-being, he immersed himself in the early retirement literature and finance, interviewing hundreds of others on the path, and contributing innovative research to safe withdrawal rates (from retirement accounts) studies and long-term investing strategies tailored to the needs of early retirees.

He clarified and advocated the 4%-of-principal withdrawal (as opposed to an initial 4% rising by inflation in subsequent years) coupled with his 95% Rule which are becoming mainstream thinking for long term retiree finance.

What Is The Clyatt Sandwich Portfolio

The Clyatt Sandwich Portfolio consists of the following asset classes with their respective total weights:

Asset classWeight in the portfolio

This is the more detailed allocation of the Clyatt Sandwich Portfolio assets with appropriate weights:

Asset AllocationWeight
U.S. Large Cap Stocks20.00%
U.S. Small Cap Stocks8.00%
International Large Cap Stocks6.00%
International Small Cap Stocks10.00%
Emerging Markets6.00%
Intermediate-Term Bonds30.00%
International Bonds11.00%

Stocks In The Clyatt Sandwich Portfolio

Stocks are used as high-return securities that increase portfolio returns, but stocks are more risky and volatile than bonds. The Clyatt Sandwich Portfolio includes the following types of stocks:

  • US Large Cap Blend – US large-cap growth and value stocks that virtually replicate the benchmark S&P 500 stock index;
  • US Small Cap Blend – US small cap growth and value stocks. Such stocks have historically outperformed large-cap stocks;
  • International Large Cap Blend – international large-cap growth and value stocks that have a low correlation with US stocks;
  • International Small Cap Blend – international small cap growth and value stocks that have a low correlation with US stocks;
  • Emerging Markets – these stock markets are more risky but typically outperforms developed stock markets in terms of growth;
  • Real estate investment trust (REIT) stocks – these stocks historically have a low correlation with the S&P 500 stock index.

For stocks, we have picked these ETFs which are well diversified, have high liquidity, and a long performance history:

Portfolio SectorETF NameETF Ticker
U.S. Large Cap StocksSPDR S&P 500 ETF TrustSPY
U.S. Small Cap StocksiShares Core S&P Small-Cap ETFIJR
International StocksiShares MSCI EAFE ETFEFA
International Small Cap StocksiShares MSCI EAFE Small-Cap ETFSCZ
Emerging MarketsiShares MSCI Emerging Markets ETFEEM
REITsiShares U.S. Real Estate ETFIYR

Bonds In The Clyatt Sandwich Portfolio

Bonds are used in the portfolio as low-risk, low-volatility securities that reduce the portfolio’s return but also reduce the maximum drawdown. The Clyatt Sandwich portfolio includes the following types of bonds:

  • Intermediate-Term Bonds – medium-term US treasury bonds that are highly reliable;
  • International Bonds – short-term, medium-term and long-term non-US government bonds that are highly reliable;
  • Cash – ultra short-term treasury bonds that are highly reliable and, in fact, are a cash equivalent;

For bonds, we have picked these ETFs which are well diversified, have high liquidity and a long performance history:

Portfolio SectorETF NameETF Ticker
Intermediate-Term BondsSPDR Portfolio Intermediate Term Treasury ETFSPTI
International BondsSPDR Bloomberg International Treasury Bond ETFBWX
CashiShares Short Treasury Bond ETFSHV

Backtesting Of The Clyatt Sandwich Portfolio

We backtested The Clyatt Sandwich Portfolio using a “buy and hold” strategy rebalancing at the beginning of each year. For backtesting, we used the ETFs we picked with the appropriate weights. Backtesting interval from 2007 to 2023.

Portfolio equity curve:

Clyatt Sandwich Portfolio performance and returns

Portfolio underwater curve (drawdowns):

Clyatt Sandwich Portfolio risk and drawdowns

Portfolio monthly and annual returns:


This is the portfolio performance statistics compared to benchmark S&P 500 Total Return index:

Statistical MetricPortfolioS&P 500 TR
Annual Return %4.94%8.84%
Exposure %97.11%100.00%
Risk Adjusted Return %5.09%8.84%
Max. drawdown-35.06%-55.19%
Standard Deviation11.84%22.64%
Sharpe Ratio (3% risk-free)0.160.26

Conclusion On The Clyatt Sandwich Portfolio

The Clyatt Sandwich Portfolio lost out to the S&P 500 TR in terms of returns, but outperformed in terms of risk.

The drawdown and standard deviation of the portfolio is slightly lower than that of the S&P 500 TR index, because a significant portion of the portfolio (45%) are bond ETFs.


How does the Clyatt Sandwich Portfolio work, and what are its key components?

The Clyatt Sandwich Portfolio consists of 9 ETFs, eliminating the need for picking individual stocks and bonds. It allocates weights across stocks (55%), bonds (41%), and cash (4%). The detailed allocation includes U.S. Large Cap Stocks, U.S. Small Cap Stocks, International Stocks, Emerging Markets, Intermediate-Term Bonds, International Bonds, REITs, and Cash.

What performance metrics can be expected from the Clyatt Sandwich Portfolio?

Over the past 16 years, the Clyatt Sandwich Portfolio has shown a compound annual return (CAR) of 4.94%, a standard deviation of 11.84%, a maximum drawdown (MDD) of -35.06%, a Sharpe ratio of 0.16 (with a risk-free rate of 3%), and a CAR/MDD ratio of 0.14.

Why are stocks included in the Clyatt Sandwich Portfolio, and what types of stocks are considered?

Stocks are included to increase portfolio returns, but they are balanced with bonds for risk management. The portfolio includes U.S. Large Cap Blend, U.S. Small Cap Blend, International Large Cap Blend, International Small Cap Blend, Emerging Markets, and Real Estate Investment Trust (REIT) stocks, chosen for diversification, liquidity, and historical performance.

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