The Three-Fund Portfolio prioritizes simplicity in diversification by owning the whole world in just three low-cost index funds.
Asset Allocation
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| % | Asset Class |
|---|---|
| 64% | United States Large Cap Blend Stocks |
| 16% | Developed ex-US Large Cap Blend Stocks |
| 20% | United States Intermediate Term Treasury Bonds |
Asset Notes
1. Larimore specifically recommends international stocks equal to 20% of the equity portion of the portfolio. Since the default version here on Portfolio Charts includes 80% stocks, I allocated 16% (20% of 80) to international.
Other Versions
Larimore does not recommend a specific percentage of bonds. Instead, he suggests that you should select the percentage according to your age, goals, timeframe, and risk tolerance. 20% bonds is his preference as a reasonable starting point for comparison purposes, but you can also customize the percentage to your own needs.
Author
Taylor Larimore
Taylor Larimore is a finance veteran, author, and long-time poster at the Bogleheads forums. You can read about the Three-Fund Portfolio in his book The Bogleheads’ Guide to the Three-Fund Portfolio.
Overview
The Three-Fund Portfolio was created by Taylor Larimore after being inspired by the writings of Jack Bogle to simplify the investments from his own complex mix of 16 different funds to something much more sustainable. The original version back in 1999 actually included four funds — domestic stocks, international stocks, bonds, and cash. But as interest rates dropped over the years Larimore simplified even further, and the Three-Fund Portfolio took its final form.
While the percentages cited on Portfolio Charts represent Larimore’s suggestion for a reasonable starting point for study, he doesn’t actually see it as a single fixed asset allocation. Instead, he recommends adjusting the percentage of bonds according to your age, goals, timeframe, and risk tolerance. Those factors may naturally change over time, and the Three-Fund Portfolio can change right along with them. So it’s more than just an asset allocation — it’s a portfolio meant to grow right alongside the investor for life.
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Performance
Calculations use localized assets and data for the selected home country.
Comparisons
Calculations use localized assets and data for the selected home country.
Alternatives
Portfolios with a similar structure or design intent
Classic 60-40 — A similar Bogleheads staple without the international fund
Core Four Portfolio — Four simple index funds to own the market and minimize risk
Total Stock Market — A simple and effective broad domestic stock index fund
Articles
Insights that mention the Three-Fund Portfolio
Discussion
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