Three Fund or Core Four Portfolio

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Do you invest in the Three Fund or Core Four Portfolio?

Yes, I invest in the Core Four portfolio
19
100%
 
Total votes: 19

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abuss368
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Three Fund or Core Four Portfolio

Post by abuss368 »

A simple poll to see how many Bogleheads follow the:

Three Fund Portfolio
1) Total Stock Market Index Fund
2) Total International Market Index Fund
3) Total Bond Market Index Fund

or follow the:

Core Four
1) Total Stock Market Index Fund
2) Total International Market Index Fund
3) Total Bond Market Index Fund
4) REIT Index Fund

How many round out the portfolio with TIPS, Muni's, Foreign REITs etc?
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camper
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Post by camper »

Count me into the slice and dice crowd.
60/40 US/INTL.
50/50 large/small on both domestic and international equities.
50/50 nominal bonds/tips.
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Darkwaters
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Post by Darkwaters »

Lazy portfolio for now, but I'm thinking hard of adding a solid REIT fund in a lesser role (perhaps 5%) later - which would make me core four.
Valuethinker
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Re: Three Fund or Core Four Portfolio

Post by Valuethinker »

abuss368 wrote:A simple poll to see how many Bogleheads follow the:

Three Fund Portfolio
1) Total Stock Market Index Fund
2) Total International Market Index Fund
3) Total Bond Market Index Fund

or follow the:

Core Four
1) Total Stock Market Index Fund
2) Total International Market Index Fund
3) Total Bond Market Index Fund
4) REIT Index Fund

How many round out the portfolio with TIPS, Muni's, Foreign REITs etc?
in portfolio terms, adding a TIPS fund to the 3 fund model would be more diversifying than adding a REIT fund (greater inflation correlation).
jheez
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Post by jheez »

I am in the process of moving assets to vanguard and will have a simple 4 fund portfolio after that:

US fund
Int'l fund
intermediate bond fund
Tips fund

The goal is to be 25% each at retirement. Easy peasy
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fire5soon
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Post by fire5soon »

I'm sure the 3 fund portfolio is vastly superior to S&D in several ways… but the nagging question I have is, "What if I'm wrong?" In other words there too many smart people out there that believe in the small & value premiums for me to ignore them. I throw a bone to SV and have a moderate tilt, but I'm not sure I could dedicate myself to just sticking with the pure 3 fund idea. I absolutely love simplicity but I don't know if I could take it this far.
A man is a success if he gets up in the morning and gets to bed at night, and in between he does what he wants to do. - Bob Dylan
ResNullius
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Post by ResNullius »

I have my equity side (32%) divided between SP500, PrimeCap, CapOp, and Total Market. I added Total Market about six months/year ago, with the others having been my core (with Windsor II) for many years. I got rid of Windsor II at the time I converted that money into Total Market. The balance is held between short and intermediate investment grade, with a chunk in MM for living expenses and emergencies.
Grt2bOutdoors
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Post by Grt2bOutdoors »

Slice and dice -

Domestic/International - 50/50
Total Stock Market
All World ex-US
Global Reit
Emerging Market
Total Bond Market/Short Term Bond - 50/50
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Scott S
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Post by Scott S »

Add TIPS to the Core Four and that's what I have. At times, I wish I had just bought a TR fund so I wouldn't be tempted to "tinker" with it and pay so much attention to the market, but there are pros and cons either way.

- Scott
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FabLab
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Post by FabLab »

Guess I should vote four core, mine is three plus an intermediate muni placed on the taxable side. Or, well, maybe ....
The fundamental things apply as time goes by -- Herman Hupfeld
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bettykayWAAZ
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Post by bettykayWAAZ »

I have 77% in what I think is a "good" boglehead portfolio -- although I have more than 3 funds.
BONDS: both VBTLX and tips
US: both VTSAX and FSTMX
international: both VGTSX and VFWIX

I also have 13% in what I think of as tilts.
Plus 10% in funds I've had for a long time, which are doing well, that I can't bring myself to get rid of.

I have 14 funds, down by about half since I found bogleheads forum. Thanks to all of you.
chaz
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Post by chaz »

I have Total Stock Market Index Fund

Total Bond Market Index Fund

TIPS Fund

CappOpp Fund.
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page
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CyberBob
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Post by CyberBob »

No love for the classic 'Bogle Two' domestic stock/domestic bond combo? :(

Bob
living2notWork
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Post by living2notWork »

Unconventional Yale Portfolio with a small cap tilt. I did substitute the long term treasury for ST treasury though.


TSM - 20%
SCV - 10% (the tilt)
REIT - 20%
TIPS - 15%
LT Treasury - 15% (substituted ST for this)
Developed Mkts - 15%
Emerging Mkts - 5%

http://www.marketwatch.com/lazyportfoli ... -portfolio
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FrugalInvestor
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Post by FrugalInvestor »

I voted for 3-fund but I actually split my bonds between TBM and S-T Investment Grade due to my discomfort with interest rates and bond prices.
Have a plan, stay the course and simplify, but most importantly....Ignore the Noise!
grberry
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Location: Boston, MA

Post by grberry »

A lot of us have 401(k) plans that don't include the core three/four options. We are all forced into the category of "don't use these portfolios". You would have had a more informative poll if you had included "my retirement plans don't let me use these portfolios" as one of the options.
gregw
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Post by gregw »

I voted Core Four, but really it's a modified version based on the choices in my 410k (run by Fidelity) and the fact that I only opened Roth IRAs for me and my wife a couple of years ago at Vanguard (so my 401k balance is still around 76% of our retirement savings). In the 401k I use the Fidelity Spartan 500, Vanguard REIT (only Vanguard option available, and our plan recently converted from Investor shares to Signal), and Pimco Total Return (only bond option available). In our Roths I use the Extended Market Index in proportion to our Spartan 500 holdings to simulate TSM, and also Ttl International. We're still building our Ttl Int'l holdings--I'd like to target 30% of equities but it's still only around 17%. Once that is in line I'll probably start adding TIPS--I'd prefer 50/50 TBM/TIPS for bonds, but settled on Pimco in the 401k based on the relative balance in the accounts and the choices I had available.
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Random Musings
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Post by Random Musings »

slice and dice with some legacy actives.

Bonds are both nominal and real.

RM
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ofcmetz
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Post by ofcmetz »

Slice and dice because of options a 403B and 401K.

Core 4 in my other accounts.
Never underestimate the power of the force of low cost index funds.
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joe8d
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Post by joe8d »

I voted for 3-fund but I actually split my bonds between TBM and S-T Investment Grade due to my discomfort with interest rates and bond prices.
I would consider that as the best approach for a bond allocation.
All the Best, | Joe
Valuethinker
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Post by Valuethinker »

fire5soon wrote:I'm sure the 3 fund portfolio is vastly superior to S&D in several ways… but the nagging question I have is, "What if I'm wrong?" In other words there too many smart people out there that believe in the small & value premiums for me to ignore them. I throw a bone to SV and have a moderate tilt, but I'm not sure I could dedicate myself to just sticking with the pure 3 fund idea. I absolutely love simplicity but I don't know if I could take it this far.
Vanguard TSM will have an exposure to the Small Cap Value effect-- you get that without rebalancing.

Over to international. AFAIK the international indices have large capitalization stocks (is that still true?).

It is however hard to capture the international small value effect without using DFA funds. There are a couple of ETFs discussed here.

DFA does it right, in that they are not a pure indexer. They recognize the existence of trading costs and seek to minimize these, and the existence of momentum effects and seek to capture these.
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radionightster
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Post by radionightster »

I'm the "3 fund" with hedges and tilt, age in bonds.


Taxable Account:
27% - Vanguard Total Stock Market Index Fund (VTSMX)
27% - Vanguard Total International Stock Index Fund (VGTSX)
08% - Vanguard FTSE All-World ex-US Small-Cap Index Fund (VFSVX)
08% - Vanguard Small-Cap Value Index Fund (VISVX)

Non-taxable Account:
15% - Vanguard Total Bond Index (VBMFX)
15% - Vanguard Inflation-Protected Secs (VIPSX)
35% US // 35% INTL // 30% BONDS
Valuethinker
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Post by Valuethinker »

radionightster wrote:I'm the "3 fund" with hedges and tilt, age in bonds.


Taxable Account:
27% - Vanguard Total Stock Market Index Fund (VTSMX)
27% - Vanguard Total International Stock Index Fund (VGTSX)
08% - Vanguard FTSE All-World ex-US Small-Cap Index Fund (VFSVX)
08% - Vanguard Small-Cap Value Index Fund (VISVX)

Non-taxable Account:
15% - Vanguard Total Bond Index (VBMFX)
15% - Vanguard Inflation-Protected Secs (VIPSX)
I am assuming you are therefore 30?

It's an eminently sensible asset allocation.

I have my own heterodox view that the nature of asset returns (these huge positives and negatives) mean that we should be more overweight equities than any straight line rule until somewhere between 45-55, and then we should probably be much more into bonds, and particularly TIPS type bonds, than any straight line rule).

My intuition being that until your late 40s you can play the 'equity always outperforms in the long run' game quite hard, and after that, given time horizons, you cannot play it hard at all.

I am not remotely sure that this view is substantiated but to quote Monty Python 'my name is Anne Elk. And this is my theory'.

One could make the case that another way of saying that is play Small Cap Value hard until 45, and then cut back sharply-- it is the same point about portfolio risk, really.
rustymutt
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Post by rustymutt »

I'm a slice & dice guy. Tilted towards value and small caps.
Even educators need education. And some can be hard headed to the point of needing time out.
rustymutt
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Post by rustymutt »

fire5soon wrote:I'm sure the 3 fund portfolio is vastly superior to S&D in several ways… but the nagging question I have is, "What if I'm wrong?" In other words there too many smart people out there that believe in the small & value premiums for me to ignore them. I throw a bone to SV and have a moderate tilt, but I'm not sure I could dedicate myself to just sticking with the pure 3 fund idea. I absolutely love simplicity but I don't know if I could take it this far.
If you did go with the 3 funds, you'd be tilted toward large cap.
Even educators need education. And some can be hard headed to the point of needing time out.
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fire5soon
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Post by fire5soon »

rustymutt wrote:
fire5soon wrote:I'm sure the 3 fund portfolio is vastly superior to S&D in several ways… but the nagging question I have is, "What if I'm wrong?" In other words there too many smart people out there that believe in the small & value premiums for me to ignore them. I throw a bone to SV and have a moderate tilt, but I'm not sure I could dedicate myself to just sticking with the pure 3 fund idea. I absolutely love simplicity but I don't know if I could take it this far.
If you did go with the 3 funds, you'd be tilted toward large cap.
Unless you're 3 fund portfolio is SV, Intl SV & TIPS 8)
A man is a success if he gets up in the morning and gets to bed at night, and in between he does what he wants to do. - Bob Dylan
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Scott S
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Post by Scott S »

CyberBob wrote:No love for the classic 'Bogle Two' domestic stock/domestic bond combo? :(

Bob
I was very briefly when investing my first couple thousand at Vanguard. :wink:

- Scott
ClaireTN
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Post by ClaireTN »

We have the three fund portfolio plus TIPS.
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abuss368
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Post by abuss368 »

Thank you for all the great responses. The poll was very informative.
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ruralavalon
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Post by ruralavalon »

On the equity side about --
40% TSM
10% REIT
10% SCV
30% Total Int'l
10% Prec. Met. & Mining
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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