Core-4 Portfolio
Three-Fund plus REITs — a flexible framework
Philosophy
Start with the Three-Fund Portfolio and add REITs for real estate diversification. Choose your own stock/bond ratio.
Origin
2005 — Published in Ferri's 2005 book All About Asset Allocation. A flexible framework with 60/30/10 equity split.
Key Principles
- ✓ Equity split is always 60% US, 30% international, 10% REITs
- ✓ Overall stock/bond ratio is chosen by the investor
- ✓ REITs add real estate as a distinct asset class
- ✓ A framework, not a fixed allocation — adapts to any risk tolerance
Target Allocation
| Asset | Category | Weight |
|---|---|---|
| US Total Stock Market (VTI) | Equity | 48% |
| International Stocks (VXUS) | Equity | 24% |
| REITs (VNQ) | Real Estate | 8% |
| US Total Bond Market (BND) | Bonds | 20% |
Advantages
- Natural extension of the Three-Fund with real estate exposure
- Flexible framework — adjust stock/bond ratio for any risk level
- Only four funds to manage
- REIT exposure adds diversification and inflation protection
Considerations
- The shown 80/20 split is aggressive — not for everyone
- REITs can be volatile and correlated with stocks in crises
- No alternative assets beyond REITs
- Requires deciding your own stock/bond ratio
Best For
Three-Fund investors who want to add real estate exposure.
About the Author
Rick Ferri is a CFA charterholder and prominent advocate of index fund investing.
Frequently Asked Questions
What is the Core-4 Portfolio?
The Core-4 Portfolio, created by Rick Ferri in 2005, extends the Three-Fund Portfolio by adding REITs. The equity split is always 60% US, 30% international, and 10% REITs. The overall stock/bond ratio is flexible — the shown 80/20 is just one option.
How do I choose my stock/bond ratio in the Core-4?
The Core-4 is a framework, not a fixed allocation. A common rule of thumb is to hold your age in bonds (e.g., 30-year-old → 70/30 stocks/bonds). The equity split (60/30/10) stays constant regardless of your stock/bond choice.
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