CLASSIC CORE-4 PORTFOLIO
The Classic Core-4 Portfolio was created by Rick Ferri in 2007. It has since become a popular strategy among individual investors. The Texas State Securities Board recently highlighted this portfolio as an example of simple investing in their Texas Investor Guide. The portfolio represents four broadly diversified assets classes:
- Total US Stock Market
- Real Estate Investment Trusts (REITs)
- Total International Stock
- US Investment-grade Bonds
The US stock portion is represented by a broad index funds of US domiciled companies and corporations outside the US that primarily do business in the US. Developed countries and emerging markets are represented using a total international stock index fund. Real estate is predominantly composed of US equity real estate investment trusts (REITs). It’s included as a separate asset class because the commercial real estate market is a large part of the economy but only a small fraction of the stock market. The allocation to international is unhedged, meaning currency fluctuations affect the return. The US bond portion includes Treasury securities, mortgages, corporate bonds and other investment-grade securities.
MODERATE GROWTH CLASSIC CORE-4 PORTFOLIO
The Moderate Growth portfolio has an allocation of 60% in equity and 40% in fixed income.
SELECTING YOUR ALLOCATION
CLICK HERE to view the asset allocation of four Classic Core-4 Portfolios ranging from Low-risk to Aggressive. More risk in a portfolio means greater short-term volatility and the expectation of higher long-term returns.
For assistance in selecting an appropriate risk level, use the Vanguard Risk Tolerance-Asset Allocation Tool or a similar questionnaire designed to recommend a stock and bond allocation.
FUND SELECTION
CLICK HERE to see suggested mutual funds and exchange-traded funds (ETFs) for each category in the Classic Core-4. The fund selection includes the largest in each asset class and three others that are appropriate. The list does not represent the complete universe of suitable funds.
ANALYZE YOUR SELECTIONS IN PORTFOLIO VISUALIZER
Here is a PORTFOLIO VISUALIZER output for the Classic Core-4 Moderate Growth portfolio using funds from the Classic Core-4 FUND SELECTION page.
You can change funds by typing in different tickers or fund names from the FUND SELECTION page or your own selections. You can also change the portfolio allocation to each fund by typing in the percentages in each asset class based on the Classic Core-4 PORTFOLIO ALLOCATION page or using your own revised allocations. Simply enter the funds you choose and an asset allocation to each to make your analysis. Compare up to three portfolios at once.
The Portfolio Visualizer online portfolio backtesting tool allows you to construct one or more portfolios based on the selected mutual funds, ETFs and stocks to analyze and backtest portfolio returns, risk characteristics, standard deviation, annual returns and rolling returns. The results include a visualization of the portfolio growth chart and rolling returns, CAGR, standard deviation, Sharpe ratio, Sortino ratio, annual returns and inflation adjusted returns. A periodic contribution or withdrawal can also be specified together with the preferred portfolio rebalancing strategy.
GETTING HELP*
Core-4 Adviser Alliance members assist individuals and small institutional investors with all aspects of investment planning, portfolio design and account management. They also provide valuable content to the Core-4 Blog. All advisers must meet strict fiduciary standards. All advisers charge a fee for their services, which vary by firm.
*Core-4 Investing charges a fee to companies that advertise on this website. The blogs and other content provided by advertisers may facilitate their commercial purpose. Neither Core-4 Investing nor its owner guarantees the advice of any service provider; however, we do want to hear about positive and negative experiences.