Morningstar’s 15-Year Category Performance updated on January 01, 2014: Morningstar’s gives all three funds its highest “Analyst Rating” and each fund’s long-term relative performance rankings are included in the table below: Mathematically certain to outperform most investors Easy to maintain for the owner, spouse, caregivers and heirsġ5. Never underperforms the market (less worry)ġ3. Automatic rebalancing within each fundġ2. On the Efficient Frontier (highest return per unit of risk)ġ1. No “front running” that reduces sub-index returnsġ0. No tracking error to cause abandonment of the strategyĩ.

There are many advantages to taking a three fund portfolio approach.īelow are some examples of three fund portfolio allocations (click image to enlarge)ġ5 Advantages for the three fund portfolioħ. Taylor has expressed his thinking on this subject on the Bogleheads® forum, and in this guest post.Īfter a lifetime of investing since 1950 trying to “beat the market,” I am convinced that a simple 3-fund (or ETF) portfolio of Total Stock Market, Total International, and Total Bond Market, properly allocated, is an ideal portfolio for most investors. The allocation of these three asset classes can be adjusted to an investor’s risk tolerance. Author Taylor Larimore is a proponent of using a simple three-fund portfolio, consisting of a US total stock market index fund a total market international stock index fund and a US total bond market index fund.

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