Simple non-US portfolios

 are designed to perform well for non-US investors in most market conditions. Most contain a small number of low-cost funds that are easy to rebalance. They are "lazy" because the investor can maintain the same asset allocation for an extended period of time.

Non-US investors will usually want asset allocations and index funds or ETFs that are different from those employed by US investors who use "lazy" portfolios.

Simple portfolios
The simplest portfolios are based on using index funds (where these are easily available) or the corresponding ETFs to build a low-cost structure with a small number of funds, generally five or fewer, that are easy to re-balance and follow the spirit of the Bogleheads&reg; approach.

The simple index portfolios illustrated here are a collection of portfolios that contain broad based representation from the major asset classes: local or regional bonds; local or regional equities; and global bonds and global equities. The choice of broad based funds is dictated by a decision to use a passive investing philosophy to keep costs to a minimum and to accept market returns, which helps keep things simple to manage these portfolios.

Depending on the level of simplicity desired, one can build one of a:


 * Two fund portfolio consisting of a global bond fund and a global stock fund.
 * Three fund portfolio consisting of a global bond fund, global developed market stock fund and a global emerging market stock fund.
 * Four or five fund portfolios consisting of local or regional bond fund, global stock fund, local or regional stock fund, emerging market stock fund and small cap stock fund.

The main Wiki site for Bogleheads can provide ample background for the build-up of various approaches that can accord with the Bogleheads principles while introducing some variety for whatever reason. For example, see: Lazy portfolios

These portfolios are well suited for do-it-yourself (DIY) index investors in the accumulation stage, with retirement as their main goal. Simple index portfolios can also work during the withdrawal stage.

The choice of global aggregate bond fund can be for a global fund that includes both government and corporate debt, or alternatively there are some ETFs that are dedicated to global government debt only.

These generic portfolios as shown below should be made up of the appropriate available ETFs that are consistent with the local tax regime. Investors should address any tax reporting requirements that might indicate a preference for accumulating or distributing versions of the funds to be used. The actual choice of individual ETFs may be subject to the availability of specific funds.

The illustrated examples are based upon a 50/50 allocation of bonds and stocks. The allocation chosen will depend upon the evaluation of the individuals risk tolerance and their particular stage in the investment lifecycle.

Cash and cash equivalents, property and other investments assets are not included in these portfolios. These assets can become part of a more complex portfolio for the more experienced investor. Some element of cash is advised for investors as a fund for emergencies, predicted expenditure, or both.

The actual percentage allocated to each of the funds is driven by your asset allocation (AA). Your risk tolerance and your need, ability and willingness to take risk will determine the split bonds and equity.

Sample portfolios
Using the approach set out in the generic simple portfolio design set out above, the following portfolios are possible solutions for a non-US retail investor, subject to all the caveats regarding jurisdiction, domicile, tax matters and costs. Samples are given using the two and three fund solutions in both accumulating and distributing versions.

Investors need to research their domicile and tax status in order to correctly identify the particular ETF which is appropriate in their case for each asset class. There is a Boglebot tool that will provide good guidance on how to implement a two-fund portfolio given some information on tax residency and currencies and should make for a good starting point. The Boglebot will also collate necessary information for you to help post in the Bogleheads forum for further guidance.

Indices
When choosing a particular ETF or group of ETFs, investors need to be aware that the different providers may be using different benchmarks for the tracking of their fund performance. For example the iShares global aggregate bond (AGGH indicated in the accumulating sample above) tracks the Bloomberg Barclays Global Aggregate Bond Index while the Vanguard tracks the same index. However in the case of iShares global stock ETF (IWDA/SWDA indicated in the accumulating sample above) it tracks the MSCI World index while the Vanguard world stock ETF tracks the FTSE All-World index.

See also: FTSE All World Index and MSCI World Index.

The content of these indices is different and investors may wish to understand the differences and choose accordingly.

For more information on indices, see: Stock market indexing and Bond market indexing.

The amount in percentage terms of each sub asset class within an index should be followed at least in rough terms to suit the investors' overall portfolio management constraints; in other words, rounding percentages (or cash amounts) to match the exact index allocation is not necessary for the smaller sub asset classes as the Emerging Market and small cap allocations are relatively minor. It may help to group portfolio choices to one provider, subject to costs.