I’m a huge fan of Ben Felix and his proposed factor tilts. Here we’ll look at how to construct a U.S. version of his proposed model portfolio with factor tilts and why you might want to invest in it.
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Contents
Who Is Ben Felix?
Ben Felix is a portfolio manager at PWL Capital in Canada. He is perhaps better known for his YouTube channel Common Sense Investing and his Rational Reminder podcast. Admittedly, he’s been a major influence for my content.
Felix is a proponent of objectively looking at the evidence and data to inform and optimize investing decisions. For example, he is a proponent of index investing and small cap value, just like famous investors like Larry Swedroe and Paul Merriman.
Ben Felix’s credentials include:
- Northeastern University – BSc, Mechanical Engineering
- Carleton University – MBA, Finance
- CFA Charterholder
- CFP Professional
- Chartered Investment Manager (CIM®)
What Is the Ben Felix Model Portfolio?
The Ben Felix Model Portfolio, as the name suggests, is a lazy portfolio designed by Ben Felix and Cameron Passmore of PWL Capital that utilizes globally diversified index funds plus factor tilts, particularly for Size, Value, and Profitability. You can find the paper here for the proposed factor portfolio.
Felix maintains that there is a tradeoff between simplicity and optimization in index investing, and that we can look at the robust data supporting the Fama-French 5 Factor Model to slightly boost expected returns by diversifying across not only geographies but also risk factors outside of just market beta, providing globally diversified index exposure with small tweaks to increase factor exposure.
That said, note that simplicity is – and should be – absolutely reasonable and desirable for some or even most investors. Like I always say, you should always know exactly what you’re buying and why you’re buying it. Don’t blindly copy this portfolio – or any portfolio – just because you heard it mentioned online. If you don’t care to learn about equity risk factors, for example, or if a portfolio like this one is going to make you more likely to constantly tinker or have dissonance about potential underperformance, a one-fund solution using something like VT or a target date fund may be better suited for you, and that’s perfectly fine.
If you do care to learn about factors, maybe check out this page first where I do a deep dive on them and then come back here to check out the portfolio. I’ve provided a brief surface-level summary of factors below.
Asset Pricing Models
The Capital Asset Pricing Model, or CAPM, revolutionary in its time in the 1960s, proposed market beta as the original risk factor to compare portfolios. Unfortunately, market beta only explains about 2/3 of the differences in returns between diversified portfolios.
Further advances led Fama and French to expand the model to 3 factors in the early 1990s, adding Size and Value. Over sufficiently long investing horizons, small stocks tend to outperform large stocks, and Value stocks tend to outperform Growth stocks. These 3 independent risk factors now had an explanatory power of 90% of the differences between portfolios.
The later additions of Profitability and Investment offered weak but reliable statistical evidence for the explanation of most of the final 10% of anomalies not explained by the 3 Factor Model. This newest model has since been called the Fama French 5 Factor Model.
Risk Factor Premia
The inherent statistical reliability of factors means they have been persistent and pervasive across markets. The factors with some of the most compelling evidence to enhance returns are still the original two additions of Size and Value. Specifically, the Size premium refers to the returns of small stocks minus the returns of large stocks, known as small minus big or SmB. Similarly, the Value factor is high book value stocks minus low book value stocks, written as high minus low or HmL.
The positive premiums delivered by these factors has been significant historically. Remember though that there have been extended rolling periods where factors delivered a negative premium from time to time. For example, the Value premium has suffered for about the last couple decades.

But there have also been periods of market underperformance where factors had a positive premium. Felix notes: “In fact, the market has historically been less reliable at delivering positive returns than small cap and value stocks.” This is illustrated above. I don’t employ or advise market timing, but AQR maintains that Value is basically the cheapest it’s ever been right now relative to history, suggesting that now may actually be the worst time to give up on the factor, and that it’s due for a comeback.
Interestingly, the Size premium does not seem to apply to small cap growth stocks. Removing them from the data set improves the historical returns of the Size premium significantly. Thus, it’s probably a good idea to only focus on small cap value.
Arguably more importantly, the other factors like Profitability and Investment exert greater premiums and have been more statistically robust within the small-cap universe. That is, all things being equal, essentially factors are more “powerful” in small cap stocks than in large cap stocks.
My own personal portfolio tilts toward these factors and closely resembles the portfolio below.
“Factor” ETFs?
Felix notes that newer financial products with “Factor” in the name ironically tend to deliver poor factor exposure and carry higher fees.
There are low-cost ETF products that have existed for many years which are better positioned to deliver on factor premiums than most so-called factor funds. A fund that is called a factor fund seems to automatically command a higher fee despite not being positioned to deliver on factor returns.”
As such, the model portfolio here is conveniently constructed with popular, low-fee ETFs. At the time of writing, there exist no good products to specifically target the Profitability and Investment factors, but we do get some convenient exposure to Profitability via the U.S. small cap value ETF noted below.
The Ben Felix Model Portfolio Asset Allocation
Since Ben Felix and PWL Capital are in Canada, the proposed model portfolio is based largely around Canadian index funds:
30% iShares Core S&P/TSX Capped Composite ETF – XIC
30% Vanguard US Total Market ETF – VUN
10% Avantis U.S. Small Cap Value ETF – AVUV
16% iShares Core MSCI EAFE IMI Index ETF – XEF
6% Avantis International Small Cap Value ETF – AVDV
8% iShares Core MSCI Emerging Markets IMI Index ETF – XEC
A U.S. translation looks like this:
60% U.S. Stock Market
16% International (ex-US) Developed Markets
8% Emerging Markets
10% U.S. Small Cap Value
6% International (ex-US) Small Cap Value
Note that this is a 100/0 (100% stocks, 0% bonds) version of this portfolio. If you want some bonds, simply scale back each stocks holding appropriately. For example, an 80/20 allocation would look like this:
48% U.S. Stock Market
13% International (ex-US) Developed Markets
6% Emerging Markets
8% U.S. Small Cap Value
5% International (ex-US) Small Cap Value
20% Bonds
Ben Felix Model Portfolio Performance vs. the S&P 500
Here’s a rough approximation of how this 100/0 factor-tilted portfolio compared to the S&P 500 index from 2000 through 2020:

Ben Felix Model Portfolio ETF Pie for M1 Finance
M1 Finance is a great choice of broker to implement the Ben Felix Model Portfolio because it makes regular rebalancing seamless and easy, has zero transaction fees, and incorporates dynamic rebalancing for new deposits. I wrote a comprehensive review of M1 Finance here.
Using mostly low-cost Vanguard funds, we can construct a U.S. translation of the Ben Felix Factor Portfolio like this:
- VTI – 60%
- VEA – 16%
- VWO – 8%
- AVUV – 10%
- AVDV – 6%
You can add this pie to your portfolio on M1 Finance by clicking this link and then clicking “Save to my account.”
Disclosure: I am long VEA, VWO, AVUV, and AVDV in my own portfolio.
Interested in more Lazy Portfolios? See the full list here.
Disclaimer: While I love diving into investing-related data and playing around with backtests, I am in no way a certified expert. I have no formal financial education. I am not a financial advisor, portfolio manager, or accountant. This is not financial advice, investing advice, or tax advice. The information on this website is for informational and recreational purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. Do your own due diligence. Past performance does not guarantee future returns. Read my lengthier disclaimer here.

Are you aware that Ben Felix released an additional variation of this portfolio that uses active ETFs from Avantis for better tilting towards the factors? Did you consciously exclude that portfolio or were you unaware? It’s linked to in the description of a December 2020 podcast.
Ran across that one this morning actually. I must have been looking at the previous 2019 paper. I’ll be updating the post ASAP to reflect the most recent paper and model portfolio (and new ETFs).
I’ll have to dig in to the new paper, but at a glance I’m not sure why they ditched the U.S. large cap value tilt in favor of ex-US small value, as the former has paid a much greater premium historically.
In AVUV’s short lifespan of a little over 1 year, VIOV still has greater loading on Value and Investment. Will be interesting to see how these 2 play out over time.
Just updated it and included the Avantis ETFs in my small cap value discussion here. I think I actually prefer the old model portfolio from 2019 that had U.S. large cap value, and I think I still like DLS over AVDV for ex-US SCV exposure.
He mentioned in his podcast that they dropped the emphasis on large & mid-cap in favor of the factor tilt towards small-cap where the factors are more impactful. He wanted to keep things simpler and left the larger size factors out for that reason.
This is exactly what I’ve been trying to build from scratch. This review and the corresponding links are very informative. You’re site has made getting into investing much easier. Thank you.
Really glad to hear it, Ben! Thanks for the kind words!
How would one go about doing a portfolio visualization (or another backtesting tool?) of this portfolio over a longer time duration, especially compared to the S&P 500 or the S&P completion index or a typical 60/40 portfolio? Additionally, what tickers did you use for the backtest? Portfolio Visualizer doesn’t appear to have data for VIOV going back that far.
Another concern is that I find the composition of 100% stocks is likely to be concerning to many investors, especially since the max drawdown appears larger than that of the S&P 500 over the same time period shown above.
You’d just need to find mutual fund equivalents or underlying indexes that go back further. I used the mutual fund equivalents in PV in this case; don’t remember what they are off the top of my head.
But yes, this portfolio as it stands is obviously better suited for a young investor with a high risk tolerance since it’s 100% stocks. It’s more of an illustration of how to structure the factor tilts. One could add bonds as needed as time goes on while still maintaining the factor tilts; just requires some math with fractions.