I like it because the fees are low
This is marketing. The fees
appear low. It is hoped you analyze those fees in absolute terms, at which point they are very attractive.
In reality, the amount of cash the portfolio forces you to carry (and which they are leveraging to get much-better-than-cash returns) is a drag on the portfolio and allows them to market low obvious fees. But given the alternative is you investing in a broad index (I'm with Glenstache, go broader than just the S&P 500), you also need to consider the
opportunity cost of holding the cash. The appropriate analysis is a relative analysis, not an absolute one...
Whenever I compare my portfolio to the S&P 500 I feel like the S&P 500 is always doing much better.
The length of time the intelligent portfolios have existed is (relatively) very short; the market results have been a situation where the combination of assets would be expected to lag the S&P 500. Based on a lengthy discussion with them just days after the intelligent portfolios were announced, their models indicate value to the cash component, and are based on more than 4 years of returns. In a major downturn, you will certainly have less volatility due to the cash component.
Then again, lower volatility and lower return may or may not help you. After my discussions with them I chose not to use the intelligent portfolios.
The cash is a form of insurance policy. Remember that insurance is (with few exceptions) extremely profitable for the seller. Just like deciding if you still need collision insurance on a 10 year old car (why would you?!?), it's your job to figure out if you need the insurance. If we get a major downdraft, do you NEED less volatility?
The debate then becomes whether you care about volatility (up and down) and what risks you are trying to hedge (using risk as actual risks, not volatility). For the vast majority of people, and almost all in the accumulation stage, the answer will be: Minimize fees and invest fully in a broad index fund.
If you really want to drill into actual risks and how to hedge them, that is a second order effect, and you need to know a lot more about markets. The major one we focus on here is the initial sequence of returns risk after retirement, and the forum has plenty of analysis on that. Other risks exist, but increasingly are rare events, impact small portions of the population, etc... Those are rarely covered on the MMM forums (research left as an exercise for the reader).