The term, “equity premium” refers to the extra return that investors can expect by allocating more of their portfolios to stocks and less to bonds. The equity premium is the return of stocks above and beyond the return of bonds. An investor's acceptance or rejection of the notion of an equity premium would greatly impact how that person builds a portfolio. The equity premium is alive and well but achieving it requires the use of various equity and equity-like asset classes. If one wants to harvest a full equity premium, one needs to assemble a diversified equity portfolio. In most portfolios, the core ingredient is U.S. stock mutual funds. The 7Twelve includes three U.S. stock funds—the most funds in any of the seven asset categories. But to achieve overall portfolio diversification, more is not added to the U.S. stock funds. That is why non-U.S. stock funds, a real estate fund, a resources fund, and a commodities fund are added. The 7Twelve portfolio also spices up the fixed income portion of the portfolio with four different bond funds. The 7Twelve portfolio produces the elusive equity premium precisely because it contains a rich array of ingredients.