Core Four Portfolio by Rick Ferri
The Core Four Portfolio by Rick Ferri is a simple, low-cost passive portfolio developed by Rick Ferri, a fee-only financial advisor, prolific investing author, and founder of Portfolio Solutions. Ferri outlined the portfolio in his book All About Asset Allocation and through his writing on the Bogleheads forum. It holds four broad index funds: US total stock market, international stocks, real estate investment trusts, and bonds — providing comprehensive market exposure in a minimal, easy-to-maintain structure.
Investment Philosophy
Ferri's approach is built on the principle that most of the benefit of diversification comes from a small number of broadly defined asset classes, and that adding complexity beyond a core set of holdings introduces noise without meaningfully improving risk-adjusted returns. The four funds cover equities across the US and internationally, add real estate as a distinct return driver, and anchor the portfolio with bonds. Ferri advocates for low costs and passive implementation above all else, arguing that these factors dominate long-run investment outcomes.
Who It's For
The Core Four is appropriate for a wide range of investors who want a straightforward, evidence-based portfolio without factor tilts or tactical overlays. It suits investors who value simplicity and low cost over optimisation, and who are committed to maintaining the allocation through market cycles without frequent adjustment.
Pros
- Simple four-fund structure is easy to understand, implement, and maintain
- Broad global diversification across equities, real estate, and bonds
- Very low cost when implemented with index funds
Cons
- No exposure to factor premiums such as value, size, or momentum
- REIT allocation may overlap with equities already held in the total stock market fund
- The standard bond allocation may not suit investors with specific income or duration requirements
Technical Notes
Ferri's recommended weights shift depending on investor age and risk tolerance. A common starting point is roughly 48% US stocks, 24% international stocks, 8% REITs, and 20% bonds, but individual circumstances should drive the actual allocation.
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Target Allocation
Performance Snapshot
Rolling Returns
| Period | Low | Average | High |
|---|---|---|---|
| 1 Year | -37.8% | +9.7% | +50.1% |
| 3 Year | -11.3% | +8.8% | +23.1% |
| 5 Year | -3.0% | +8.6% | +19.8% |
| 10 Year | +0.6% | +7.8% | +12.8% |
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.