Bogleheads Four Fund Portfolio
The Bogleheads Four-Fund Portfolio is an extension of the classic Bogleheads three-fund approach, adding a dedicated real estate investment trust (REIT) index fund as a fourth sleeve. The Bogleheads community — a group of index investing advocates inspired by Vanguard founder John Bogle — popularised this allocation through their forum and associated wiki. The addition of REITs reflects the view that real estate is a distinct enough asset class to warrant a separate allocation beyond what is captured in a total market stock fund.
Investment Philosophy
Like the three-fund portfolio, this approach is built on the Boglehead philosophy: own the entire market at the lowest possible cost, diversify broadly, and stay the course. The fourth fund — REITs — is added because real estate investment trusts have historically shown low correlation with the broader stock market and high dividend yields, potentially improving the portfolio's diversification and income characteristics. Weights for each fund are typically set based on individual risk tolerance and time horizon.
Who It's For
This portfolio suits the same investor as the three-fund approach — anyone who values simplicity, low cost, and passive investing discipline — but who also wants explicit exposure to real estate as a distinct asset class. It is appropriate across a wide range of risk tolerances depending on how the bond allocation is sized.
Pros
- Adds real estate exposure that may improve diversification relative to the three-fund version
- Remains simple, low-cost, and easy to understand
- Flexible: investors can adjust each of the four sleeves to reflect their personal risk tolerance
Cons
- Many total market stock funds already include REITs, so the fourth fund may create unintended overweighting
- Adds one layer of complexity and rebalancing compared to the three-fund portfolio
- REIT returns are highly sensitive to interest rates, and their dividend income is taxed as ordinary income in taxable accounts
Technical Notes
Investors should check whether their chosen total market equity fund already includes a significant REIT allocation before adding a separate REIT fund, to avoid inadvertent concentration in that sector.
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Target Allocation
Performance Snapshot
Rolling Returns
| Period | Low | Average | High |
|---|---|---|---|
| 1 Year | -37.5% | +9.7% | +45.6% |
| 3 Year | -10.8% | +8.8% | +24.2% |
| 5 Year | -2.9% | +8.6% | +20.9% |
| 10 Year | +0.1% | +7.7% | +14.3% |
Growth of $10,000
Historical Drawdown
Percentage decline from the portfolio's peak value at each point in time.
Rolling Returns
Annualised return for each rolling period ending on that date.
Annualised return for each 1Y period ending on that date.