The Core Four Portfolio by Rick Ferri invests in four fundamentally unique asset types that are productive both on their own and as a group.
Home Country
Portfolio Charts is able to translate portfolio information to the local currency, inflation, and available funds of many different countries. Choose the home country where you live, and it will update every section of the page.
Asset Allocation
How to build a Core Four Portfolio
| % | Asset Class |
|---|---|
| 48% | Germany Large Cap Blend Stocks |
| 24% | Developed World Large Cap Blend Stocks |
| 20% | Germany Intermediate Term Treasury Bonds |
| 8% | United States Real Estate Investment Trusts |
Other Versions
Rick Ferri offers several different versions of the Core Four Portfolio depending on your needs and preferences. The one described here is the original version that he now calls the Classic Core-4. A few other versions like the Total Economy Core-4 and Global Markets Core-4 can be easily modeled in the Portfolio Charts tools as well.
Author
Rick Ferri
Rick Ferri is a financial adviser and investing author. You can read about the Core Four portfolio at Core-4.com, and learn about his investing philosophy in his book All About Asset Allocation.
Overview
Rick Ferri has long been a vocal champion of low-cost DIY investing, and the Core Four Portfolio represents his best advice for people who want to escape high fees and complex asset allocations. In his own words:
Simple investing is a virtue – the ultimate in portfolio sophistication. A few low-cost, broadly diversified index funds or ETFs held in a portfolio will beat complex strategies almost every time. Why waste your time and money on complexity? Be simple and be rewarded.
The four assets in the Core Four are selected based on the following characteristics:
- All have an economic purpose that is fundamentally different from each other.
- All produce regular cash-flow from interest, dividends or rents.
- The historic correlations between asset classes have resulted in a diversification benefit.
- All asset classes can be purchased using a very-low cost index fund or ETF.
A notable part of Ferri’s philosophy is evident in the juxtaposition of points 2 and 3. While some portfolios select assets primarily for how they affect overall performance as a group, Ferri believes that they should also stand on their own with regular cash-flow.
The Core Four Portfolio does a nice job of distilling several similar portfolios down to their simplest form, and is a good choice for investors seeking a solid financial foundation with low fees and minimum complexity.
Performance
Since 1970, an investor in Germany holding the Core Four Portfolio earned an average 6.8% real return, with a baseline CAGR of 4.5% over 15 years. It supported a 4.4% safe withdrawal rate for 30 years and 3.5% indefinitely. Its worst peak-to-trough loss was 38%, and the longest a new investment spent below water was under 13 years.
Core Four Portfolio Performance
| # | Metric | What it measures |
|---|---|---|
| 6.8% | Average return | Mean annual return after inflation |
| 4.5% | Baseline real return (15 years) | What 15-year stretches returned in the weaker outcomes |
| 4.4% | Safe withdrawal rate (30 years) | Highest spending rate that lasted 30 years in the worst case |
| 3.5% | Long-term withdrawal rate | The SWR floor over very long retirements |
| 38% | Deepest drawdown | Worst peak-to-trough loss after inflation |
| 13 years | Longest drawdown | Longest a new investment stayed below what you put in |
| 16.2% | Volatility (standard deviation) | Year-to-year variation in returns |
Stats for all home countries
Summary Stats by Home Country
| Home country | Average | Baseline | SWR | LTWR | Deepest | Longest | Volatility |
|---|---|---|---|---|---|---|---|
| Australia (aus) | 6.1% | 4.3% | 3.3% | 2.9% | 57% | 16 years | 14.6% |
| Canada (can) | 6.7% | 4.4% | 4.6% | 4.0% | 39% | 11 years | 11.8% |
| France (fra) | 7.2% | 4.1% | 4.2% | 3.6% | 43% | 14 years | 16.5% |
| Germany (deu) | 6.8% | 4.5% | 4.4% | 3.5% | 38% | 13 years | 16.2% |
| Italy (ita) | 6.1% | 2.2% | 2.9% | 2.4% | 59% | 16 years | 18.4% |
| Japan (jpn) | 6.7% | 2.3% | 3.7% | 3.0% | 50% | 20 years | 16.7% |
| Netherlands (nld) | 7.5% | 4.2% | 4.3% | 3.5% | 47% | 13 years | 16.3% |
| Spain (esp) | 6.1% | 2.3% | 2.6% | 2.2% | 69% | 19 years | 17.5% |
| Sweden (swe) | 9.2% | 6.5% | 4.9% | 4.4% | 37% | 12 years | 17.9% |
| Switzerland (che) | 6.3% | 3.4% | 3.7% | 3.1% | 50% | 14 years | 15.8% |
| United Kingdom (gbr) | 6.4% | 3.9% | 4.3% | 3.6% | 59% | 13 years | 15.2% |
| United States (usa) | 6.8% | 4.0% | 4.5% | 3.9% | 41% | 13 years | 13.2% |
To see this portfolio from a specific home country’s perspective, link readers to this page with ?home=COUNTRY added to the URL, using the codes shown in parentheses in the table above (e.g. ?home=aus). The portfolio itself is fixed by the page, so ?pk= has no effect here. More in the Guide for AI Assistants.
Charts
Different ways to visualize the Core Four Portfolio
Comparisons
How the Core Four Portfolio compares to other options
Alternatives
Portfolios with a similar structure or design intent
Ideal Index Portfolio — Similar structure with a few more stock funds
No-Brainer Portfolio — Shares a common philosophy with a different 4th fund
Pinwheel Portfolio — Builds on the Core-4 assets with performance-augmenting tweaks
Articles
Insights that mention the Core Four Portfolio
Discussion
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