Rick Ferri 60/40 portfolio

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minskbelarus47
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Rick Ferri 60/40 portfolio

Post by minskbelarus47 » Thu Nov 20, 2014 12:42 pm

Any comments on this portfolio?

Can anyone suggest an equivalent all ETF portfolio?

Can anyone suggest an equivalent non Vanguard (iShares, etc).

27% VG TSM VTI
9% iShares S&P Small Cap Value IJS
6% VG Reit VNQ
5.4 VG Euro VGK
5.4 VG Pacif VPL
3.6 DFA Em Mkts DFCEX
3.6 DFA Int'l Sm Cap Val DISVX

24% VG TBM BND
8 VG Inflation Port Bnds VIPSX
8 VG Hi Yld VWEHX

Comments Pls

RadAudit
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Re: Rick Ferri 60/40 portfolio

Post by RadAudit » Thu Nov 20, 2014 3:36 pm

I believe Mr. Ferri will probably never steer you but so far wrong and then never on purpose. This portfolio should be OK assuming it is consistent with attaining your goals, and matching your need, ability and willingness to accept the risks involved.

Some on this forum think the Three Fund Portfolio and / or a Target Retirement Date fund may accomplish much the same thing with less care and feeding from the individual investor.
FI is the best revenge. LBYM. Invest the rest. Stay the course.

Bubbagump
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Re: Rick Ferri 60/40 portfolio

Post by Bubbagump » Thu Nov 20, 2014 3:43 pm

My guess is that you read an older copy of his Asset Allocation book. Back then EAFE and were separate funds for instance. Now days, Vanguard and others have combined things to make things much simpler. So for instance, a nearly identical portfolio today on the equity side might simply be:

30% VTSAX (VTI)
18% VTIAX (VXUS)
6-8% REIT Index VGSLX (VNQ)

You can certainly break things out if you want to tilt, but if your intention is not to tilt, it doesn't need to be so complicated.

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dbCooperAir
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Re: Rick Ferri 60/40 portfolio

Post by dbCooperAir » Thu Nov 20, 2014 3:47 pm

I loved Rick's book, All About Asset Allocation, as noted above I think you may have on older copy.

I think in the end a 3-4 fund plan comes close enough, I would think he would agree as well.
http://www.bogleheads.org/wiki/Lazy_portfolios

In the end I went with Ricks Three.

I think a person could do it with just 2 funds now depending on how you look at the international split.
Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. | -Dwight D. Eisenhower-

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G-Money
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Re: Rick Ferri 60/40 portfolio

Post by G-Money » Thu Nov 20, 2014 4:07 pm

Bubbagump wrote:My guess is that you read an older copy of his Asset Allocation book. Back then EAFE and were separate funds for instance. Now days, Vanguard and others have combined things to make things much simpler. So for instance, a nearly identical portfolio today on the equity side might simply be:

30% VTSAX (VTI)
18% VTIAX (VXUS)
6-8% REIT Index VGSLX (VNQ)

You can certainly break things out if you want to tilt, but if your intention is not to tilt, it doesn't need to be so complicated.
+1. But, in the interest of full disclosure, I really hate small portfolio slices. There's nothing inherently wrong with having 10 holdings; it's just more than I prefer. So if you want 10 moving pieces, it's great. If you are looking to cut it down a bit, below is what I'd recommend.

On the international side, I think it's needlessly complex. Run those four international funds/etfs through Morningstar x-ray and compare to VXUS. They're nearly identical. I'd expect VXUS to perform almost exactly the same as that combination of international funds.

On the fixed income side, I think 1 fund would do the trick. The 60/20/20 combo of TBM, TIPS, and HY means, in the aggregate, you (slightly) lower the average credit quality of your bond holdings compared to just holding TBM. IMO, Vanguard Intermediate Bond Index Fund (BIV) has roughly the same average credit rating as those 3 holdings, roughly the same amount of government bonds, and will likely perform *about* the same as that combination of funds. Close enough for me.

On the domestic side, you've got a tilt to SCV and REIT. That's fine (I tilt to SCV, too). Make sure you really believe in those asset classes and will stick with them through potentially long stretches of underperformance.

But, as I stated above, if you're happy with 10 pieces, keep them as-is.
Don't assume I know what I'm talking about.

asif408
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Re: Rick Ferri 60/40 portfolio

Post by asif408 » Thu Nov 20, 2014 4:13 pm

minskbelarus47,

How about Rick's Core Four portfolio (http://www.bogleheads.org/blog/core-four-portfolios/)?

With Vanguard ETFs:
36% VTI (Vanguard Total Stock Market)
18% VXUS (Vanguard Total International Stock Market)
6% VNQ (Vanguard REIT)
40% BND (Vanguard Total Bond Market)


With Ishares ETFs the equivalent would be:
36% ITOT (iShares Core S&P Total Market)
18% IXUS (iShares Core MSCI Total International)
6% IYR (iShares US Real Estate)
40% AGG (iShares Core Total US Bond Market)


I personally don't think you need high-yield bonds or a TIPS fund unless you really want them. I started out like you with more funds but have since simplified to the Core Four. If you want to add a small value tilt you could do that as well, but I think 4-5 funds is more than enough.

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Rick Ferri
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Re: Rick Ferri 60/40 portfolio

Post by Rick Ferri » Thu Nov 20, 2014 8:25 pm

Hi and thanks for asking.

Start with three ETFs:

VTI for the US market
VXUS for the international market
BND for bonds or a comparable fund (or CD ladder)

Everything else is an add-on and not particularly important.

Rick Ferri
The Education of an Index Investor: starts in darkness, finds enlightenment, overcomplicates everything, embraces simplicity.

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dbCooperAir
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Re: Rick Ferri 60/40 portfolio

Post by dbCooperAir » Thu Nov 20, 2014 9:24 pm

You heard it right from the man. Where else will you ever get that kind of service.

The 3 funds Rick noted are exact same ones I use as well, almost. I have the Mutual Fund counter parts in one account just for fun :wink:

Edit:
The more I think about this we should find a sticky for this part from Rick
Everything else is an add-on and not particularly important.
Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. | -Dwight D. Eisenhower-

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parsi1
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Re: Rick Ferri 60/40 portfolio

Post by parsi1 » Thu Nov 20, 2014 9:49 pm

I am in a target dated fund but I like this portfolio and the allocations.

Rick Ferri's Lazy Three Fund Portfolio
40% Vanguard Total Bond Market Index Fund
40% Vanguard Total Stock Market Index Fund
20% Vanguard Total International Stock Index Fund


edited: sorry I lied, I also have Reit, so I am more in core four type of portfolio

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joe8d
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Re: Rick Ferri 60/40 portfolio

Post by joe8d » Thu Nov 20, 2014 9:56 pm

Life Strategy Moderate will give the 3 fund portfolio in the 60/40 proportion in one fund. I do like Ricks options for the "Bond" portion :
BND for bonds or a comparable fund (or CD ladder)
All the Best, | Joe

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abuss368
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Re: Rick Ferri 60/40 portfolio

Post by abuss368 » Thu Nov 20, 2014 10:37 pm

Rick Ferri wrote:Hi and thanks for asking.

Start with three ETFs:

VTI for the US market
VXUS for the international market
BND for bonds or a comparable fund (or CD ladder)

Everything else is an add-on and not particularly important.

Rick Ferri
Hi Rick,

I really like the Three Fund Portfolio. In fact, the older I get, the more I appreciate it. It has been reassuring to hear you discuss the many benefits over the last year or so.

Best.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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Rick Ferri
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Re: Rick Ferri 60/40 portfolio

Post by Rick Ferri » Fri Nov 21, 2014 9:45 am

abuss368 wrote: Hi Rick,

I really like the Three Fund Portfolio. In fact, the older I get, the more I appreciate it. It has been reassuring to hear you discuss the many benefits over the last year or so.

Best.
A three fund portfolio provides the main ingredients of a successful asset allocation. All else is icing on the cake, or perhaps the flavor of the icing on the cake. Icing changes the taste of a cake a little, but it's still the same cake.

Rick Ferri
The Education of an Index Investor: starts in darkness, finds enlightenment, overcomplicates everything, embraces simplicity.

dbr
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Re: Rick Ferri 60/40 portfolio

Post by dbr » Fri Nov 21, 2014 10:26 am

Rick, it is truly refreshing to hear from a well regarded adviser and author in the field that people do not need to agonize over all the over-engineering of portfolios that is presented in too many places.

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Rick Ferri
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Re: Rick Ferri 60/40 portfolio

Post by Rick Ferri » Fri Nov 21, 2014 10:31 am

dbr wrote:Rick, it is truly refreshing to hear from a well regarded adviser and author in the field that people do not need to agonize over all the over-engineering of portfolios that is presented in too many places.
:happy

Rick Ferri
The Education of an Index Investor: starts in darkness, finds enlightenment, overcomplicates everything, embraces simplicity.

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midareff
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Re: Rick Ferri 60/40 portfolio

Post by midareff » Fri Nov 21, 2014 10:40 am

Bubbagump wrote:My guess is that you read an older copy of his Asset Allocation book. Back then EAFE and were separate funds for instance. Now days, Vanguard and others have combined things to make things much simpler. So for instance, a nearly identical portfolio today on the equity side might simply be:

30% VTSAX (VTI)
18% VTIAX (VXUS)
6-8% REIT Index VGSLX (VNQ)

You can certainly break things out if you want to tilt, but if your intention is not to tilt, it doesn't need to be so complicated.

+1 ...... This isn't fried chicken with 17 secret herbs and spices. VXUS is near 20% EM. You might get the result you are looking for by supplementing VXUS with VSS (small international) in an appropriate ratio. Bond selection looks right out of an older Rick Ferri book.

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abuss368
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Re: Rick Ferri 60/40 portfolio

Post by abuss368 » Fri Nov 21, 2014 3:29 pm

Rick Ferri wrote:
abuss368 wrote: Hi Rick,

I really like the Three Fund Portfolio. In fact, the older I get, the more I appreciate it. It has been reassuring to hear you discuss the many benefits over the last year or so.

Best.
A three fund portfolio provides the main ingredients of a successful asset allocation. All else is icing on the cake, or perhaps the flavor of the icing on the cake. Icing changes the taste of a cake a little, but it's still the same cake.

Rick Ferri
Hi Rick,

Excellent way to describe portfolio construction!

Many thanks!
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

Levett
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Re: Rick Ferri 60/40 portfolio

Post by Levett » Fri Nov 21, 2014 5:33 pm

Rick, it is truly refreshing to hear from a well regarded adviser and author in the field that people do not need to agonize over all the over-engineering of portfolios that is presented in too many places
:thumbsup

Lev

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busdriver
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Re: Rick Ferri 60/40 portfolio

Post by busdriver » Sat Nov 22, 2014 8:10 am

Rick Ferri wrote:
A three fund portfolio provides the main ingredients of a successful asset allocation. All else is icing on the cake, or perhaps the flavor of the icing on the cake. Icing changes the taste of a cake a little, but it's still the same cake.

Rick Ferri
Rick:

From a former light airplane pilot now driving heavies across the ponds, it's really refreshing to hear a pro put it in perspective to the masses in such simple terms. Very reassuring. Thank you much.

minskbelarus47
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Re: Rick Ferri 60/40 portfolio

Post by minskbelarus47 » Sat Nov 22, 2014 9:44 am

Rick et al

Thank you for your replies. BTW, the article was from February 2014.

Wishing you all a Santa Claus rally going into the New Year.

Like the Germans say, Wishing you a good slide into the New Year, and a 55 inch 4K Ultra HD TV. Don't know if the Germans said that.

MB

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