Simple non-US portfolios

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 you can maintain the same asset allocation for an extended time.^{[note 1]}

The US has unfavourable tax rules for US assets held by non-US investors. Because of this, and for other reasons, non-US investors will usually want asset allocations and index funds or ETFs that are different from those used by US investors who use "lazy" portfolios.

Simple portfolios

The simplest portfolios use non-US domiciled index funds (where these are easily available) or Ireland domiciled 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 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. They use passive investing and index funds to keep costs to a minimum while accepting market returns. This helps keep these portfolios simple to manage.

Depending on the level of simplicity you are looking for, you can build:

A one fund portfolio consisting of a single multi-asset fund.
A two fund portfolio consisting of a global bond fund and a global stock fund.
A three fund portfolio consisting of a global bond fund, global developed market stock fund and a global emerging market stock fund.
A four or five fund portfolio 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 provides plenty of background for various approaches that can follow Bogleheads principles, while introducing some variety if you want it. For example, see: Lazy portfolios.

These portfolios are ideal if you are in the accumulation stage, with retirement as your main goal. However, simple index portfolios also work during the withdrawal stage.

When choosing a global aggregate bond fund, you can use a global fund that includes both government and corporate debt, or an ETF that holds only global government debt.

When choosing your ETFs, make sure to consider your local country tax rules. These might suggest a preference for either accumulating or distributing versions of the funds.

The illustrated examples use a 50/50 allocation of bonds and stocks. Your actual allocation will depend upon your risk tolerance and where you are in the investment lifecycle.

These portfolios do not include cash and cash equivalents, property and other asset classes (these would be part of a more complex portfolio). You should however hold some cash for emergencies, predicted expenditure, or both.

The actual percentage you would allocate to each of the funds is set by your asset allocation (AA). Your risk tolerance and your need, ability and willingness to take risk determines how you split your portfolio into bonds and equity.

One fund portfolio

Vanguard LifeStrategy funds hold stocks and bonds in a fixed allocation, and can provide you with an all-in-one single fund multi-asset portfolio. Vanguard's LifeStrategy ETF range^{[note 2]} offers a handful of discrete allocations: 20% stocks and 80% bonds; 40% stocks and 60% bonds; 60% stocks and 40% bonds; and 80% stocks and 20% bonds. If these static allocations do not match your asset allocation, you could pair up options to create a different allocation. For example, investing half in the 60% stocks fund and half in the 80% stocks fund produces a 70% stocks and 30% bonds allocation.

Two fund portfolio

Figure 1. Two fund portfolio Beyond Vanguard LifeStrategy funds, the simplest version of the Boglehead approach, with the minimum number of funds, wide diversity, low cost and modest risk, combines a global equity fund and a global bond fund in the split that match your chosen Asset Allocation (for example, 50/50, 60/40, or other).

Three fund portfolio

Figure 2. Three fund portfolio A very simple portfolio with the addition of a world emerging market equity fund in case the world equity fund that is available only cover the developed markets. Based on free float, the Emerging Markets are typically between 10 and 15% of the total global equity market.

Four fund portfolio

Figure 3. Four fund portfolio Some investors wish to invest more in the local equity market than is justified by the market weight of the local market. For example, a simple portfolio which introduces some home bias in stocks.

Five fund portfolio

Figure 4. Five fund portfolio This version adds small cap stocks to equities. This is useful when the equity funds do not include small caps and you wish to include them.

Sample portfolios

Using the approach set out above, below are some possible fund options. Be sure that you consider any local country and domicile issues, tax, and costs.

You need to know your domicile and tax status in order to identify the appropriate ETF for each asset class. There is a Boglebot tool that provides useful guidance on how to implement a two-fund portfolio given some information on tax residency and currencies, and which makes a good starting point. The Boglebot will also collate necessary information for you to help post in the Bogleheads forum for further guidance.

Sample accumulating portfolios

Asset class	Investor	ETF suggestions	Amount
One fund accumulating portfolio
Multi-asset	EU investor ^{[note 2]}	ISIN IE00BMVB5K07, V20A / VNGA20 - Vanguard LifeStrategy 20% Equity ETF Acc ISIN IE00BMVB5M21, V40A / VNGA40 - Vanguard LifeStrategy 40% Equity ETF Acc ISIN IE00BMVB5P51, V60A / VNGA60 - Vanguard LifeStrategy 60% Equity ETF Acc ISIN IE00BMVB5R75, V80A / VNGA80 - Vanguard LifeStrategy 80% Equity ETF Acc	Determined by asset allocation

Two fund accumulating portfolio
Fixed income	EU investor	ISIN IE00BDBRDM35, AGGH / EUNA - iShares Global Aggregate Bond ETF EUR Hedged	Determined by asset allocation
Fixed income	Any	ISIN IE00BYZ28V50, IGLA - iShares Global Government Bond UCITS USD ETF Acc ISIN IE00BG47KJ78, VAGU - Vanguard Global Aggregate Bond UCITS ETF - USD Hedged^{[note 3]}	Determined by asset allocation
Equities	Any	ISIN IE00B4L5Y983, IWDA / EUNL / SWDA - iShares Core MSCI World ETF ISIN IE00BK5BQT80, VWRP / VWRA / VWCE - Vanguard FTSE All-World UCITS ETF ISIN IE00B6R52259, SSAC / ISAC / IUSQ - iShares MSCI ACWI UCITS ETF	Determined by asset allocation

Three fund accumulating portfolio
Fixed income	EU investor	ISIN IE00BDBRDM35, AGGH / EUNA - iShares Global Aggregate Bond ETF EUR Hedged	Determined by asset allocation
Fixed income	Any	ISIN IE00BYZ28V50, IGLA - iShares Global Government Bond UCITS USD ETF Acc ISIN IE00BG47KJ78, VAGU - Vanguard Global Aggregate Bond UCITS ETF - USD Hedged^{[note 3]}	Determined by asset allocation
Equities	Any	ISIN IE00B4L5Y983, IWDA / EUNL / SWDA - iShares Core MSCI World ETF ISIN IE00B6R52259, SSAC / ISAC / IUSQ - iShares MSCI ACWI UCITS ETF	85-90% of equities
Emerging markets	Any	ISIN IE00BKM4GZ66, EIMI / EMIM / IS3N - iShares Core MSCI EM IMI	10-15% of equities

Sample distributing portfolios

Asset class	Investor	ETF suggestions	Amount
One fund distributing portfolio
Multi-asset	EU investor ^{[note 2]}	ISIN IE00BMVB5L14, V20D / VNGD20 - Vanguard LifeStrategy 20% Equity ETF Dist ISIN IE00BMVB5N38, V40D / VNGD40 - Vanguard LifeStrategy 40% Equity ETF Dist ISIN IE00BMVB5Q68, V60D / VNGD60 - Vanguard LifeStrategy 60% Equity ETF Dist ISIN IE00BMVB5S82, V80D / VNGD80 - Vanguard LifeStrategy 80% Equity ETF Dist	Determined by asset allocation

Two fund distributing portfolio
Fixed income	EU investor	ISIN IE00BG47KB92, VAGE - Vanguard Global Aggregate ETF EUR Hedged	Determined by asset allocation
Fixed income	Any	ISIN IE00B3F81409, AGGG / SAGG / EUNU - iShares Core Global Aggregate Bond UCITS ETF Dist	Determined by asset allocation
Equities	Any	ISIN IE00B3RBWM25, VWRL / VWRD - Vanguard FTSE All-World UCITS ETF	Determined by asset allocation

Three fund distributing portfolio
Fixed income	EU investor	ISIN IE00BG47KB92, VAGE - Vanguard Global Aggregate ETF EUR Hedged	Determined by asset allocation
Fixed income	Any	ISIN IE00B3F81409, AGGG / SAGG / EUNU - iShares Core Global Aggregate Bond UCITS ETF Dist	Determined by asset allocation
Equities	Any	ISIN IE00B3RBWM25, VWRL / VGWL / VWRD - Vanguard FTSE All-World UCITS ETF	Determined by asset allocation
Emerging markets	Any	Already included in VWRL / VGWL / VWRD	(None)

Indices

When choosing a particular ETF or group of ETFs, you need to be aware that different providers can use different benchmarks to track their fund performance. For example the iShares global aggregate bond (AGGH / EUNA indicated in the accumulating sample above) tracks the Bloomberg Barclays Global Aggregate Bond Index, and Vanguard tracks the same index. However, the iShares global stock ETF (IWDA / EUNL / SWDA indicated in the accumulating sample above) tracks the MSCI World index, while the Vanguard world stock ETF (VWRP / VWRA / VWCE) tracks the FTSE All-World index.

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

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

It is fine to follow allocation percentages approximately. You do not need to round percentages (or cash amounts) to match the exact index allocation for the smaller sub asset classes, as the Emerging Market and small cap allocations, both of which are relatively minor. For cost reasons, it may help to group portfolio choices to one provider.

Notes

↑ Paul B. Farrell, who writes MarketWatch columns about various simple portfolios, popularized the term 'Lazy portfolios'.
↑ ^2.0 ^2.1 ^2.2 Vanguard LifeStrategy ETFs hedge their bond component to EUR. This may or not be desirable, depending on the local currency.
↑ ^3.0 ^3.1 Unless your local currency is pegged to (or otherwise closely tracks) USD, hedging to the USD may not be appropriate.

External links

Bogleheads forum topic: "Past performance", Taylor Larimore. Aug 17, 2019
Vanguard Target Retirement Funds (UK)
Vanguard stocks and shares ISA (UK)
Vanguard Life Strategy Products (UK)
iShares Product List
Simple index portfolios, for Canadian investors

[1] Paul B. Farrell, who writes MarketWatch columns about various simple portfolios, popularized the term 'Lazy portfolios'.

[eurhedging-2] 2.0 ^2.1 ^2.2 Vanguard LifeStrategy ETFs hedge their bond component to EUR. This may or not be desirable, depending on the local currency.

[hedging-3] 3.0 ^3.1 Unless your local currency is pegged to (or otherwise closely tracks) USD, hedging to the USD may not be appropriate.

[note 1]

[note 2]

[note 3]

v t e Bogleheads® investing start-up kit
Introduction to investing
Asking portfolio questions Behavioral pitfalls Importance of saving early Importance of saving rate Investing start-up kit Investment philosophy Investment policy statement Percentage gain and loss Risk
Asset classes

Bonds Callan periodic table of investment returns CDs Domestic/international Money markets Stocks Pentagon Federal Credit Union Treasury Inflation Protected Securities
Funds

ETFs for Bogleheads ETFs vs mutual funds Index fund Indexing Mutual fund Mutual funds and fees Mutual funds for Bogleheads Mutual funds: additional costs Vanguard target retirement funds
Managing a portfolio

Accounts for children Asset allocation Asset allocation in multiple accounts Comparing investments Lazy portfolios Managing a windfall Prioritizing investments Rebalancing Sharia investing for US investors Tactical asset allocation Tax loss harvesting Tax-efficient fund placement Taxable account
Financial advice

Financial planner Investment adviser Robo-adviser
Non-US investors

Getting started for non-US investors My portfolio: seeking advice Building a non-US Boglehead portfolio Investing start-up kit for non-US investors Investment philosophy for non-US investors Simple non-US portfolios

v t e Bogleheads® investing start-up kit
Introduction to investing	Asking portfolio questions Behavioral pitfalls Importance of saving early Importance of saving rate Investing start-up kit Investment philosophy Investment policy statement Percentage gain and loss Risk
Asset classes	Bonds Callan periodic table of investment returns CDs Domestic/international Money markets Stocks Pentagon Federal Credit Union Treasury Inflation Protected Securities
Funds	ETFs for Bogleheads ETFs vs mutual funds Index fund Indexing Mutual fund Mutual funds and fees Mutual funds for Bogleheads Mutual funds: additional costs Vanguard target retirement funds
Managing a portfolio	Accounts for children Asset allocation Asset allocation in multiple accounts Comparing investments Lazy portfolios Managing a windfall Prioritizing investments Rebalancing Sharia investing for US investors Tactical asset allocation Tax loss harvesting Tax-efficient fund placement Taxable account
Financial advice	Financial planner Investment adviser Robo-adviser
Non-US investors	Getting started for non-US investors My portfolio: seeking advice Building a non-US Boglehead portfolio Investing start-up kit for non-US investors Investment philosophy for non-US investors Simple non-US portfolios