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Core Four Portfolio

Page history last edited by Ken Schwartz 16 years, 1 month ago

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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