Rowan Oak wrote: ↑
Sun Dec 10, 2017 9:50 am
Thank you for your response. What is your definition on the market portfolio?
The market portfolio would include market cap-weighted allocations to all publicly investable assets, particularly stocks and bonds. Exactly what the allocations would be is open to some interpretation, such as free-float adjustment, the definition of publicly investable real estate, etc. (If you search the board for "market portfolio", you will find plenty of discussion.) But, even without agreement on such details, the three-fund portfolio discussed in this thread leaves out international bonds, and it also allows the investor to determine their US/ex-US equity split, and these things alone make it something else other than the market portfolio. That is not to say that there aren't reasonable arguments in favor of these omissions or allowances. It just means it's not the market portfolio.
There also are other portfolios one may hold that do not seek to beat the market, factor tilt, market time, etc. For instance, some people choose an all-in-one fund that includes something a bit closer to the market portfolio, some people replace Total Bond with TIPS, some people replace Total US Stock and Total Int'l Stock with Total World Stock, etc. Again, I'm not trying to say any one alternative is superior, only that there are other portfolios that fit your description.