Creation date 04/24/08
As proposed by Rick Ferri on the diehards forum, the Core Four are four funds which form the "cornerstone" of a portfolio. Using Vanguard funds these four low-cost, total market funds would be:
| Fund |
Ticker |
ER |
ETF |
ER |
|
Total Bond Market Index
|
VBMFX |
0.19% |
BND |
0.11% |
|
Total Stock Market Index
|
VTSMX |
0.15% |
VTI |
0.07% |
| FTSE All-World ex-US Index |
VFWIX |
0.40% |
VEU |
0.25% |
| REIT Index |
VGSIX |
0.20% |
VNQ |
0.10% |
Rick proposes that investors first determine their bond allocation. With the remaining funds, allocate 60% to US stock, 30% to international and 10% to REIT. For example, for 60/40 and 80/20 portfolios, you would end up with the following:
|
| Fund |
60/40 |
80/20 |
|
Total Bond Market Index
|
40% |
20% |
|
Total Stock Market Index
|
36% |
48% |
| FTSE All-World ex-US Index |
18% |
24% |
| REIT Index |
6% |
8% |
Rick stresses that the exact numbers aren't important. For the 60/40 portfolio, you could increase REIT to 10%, drop US Stock to 35% and the FTSE fund to 15% if you like round numbers.
The Core Four is just a low cost foundation for your portfolio. You could add a slice of value stocks (US and/or International). You could split the bond portion between TIPS and nominal bonds, which would result in a slightly more conservative version of David Swensen's Yale portfolio (less international stock and less REIT, but otherwise the same four base funds plus TIPS.
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