Core Four
The three-fund with a slice of real estate: US stocks, international stocks, REITs and US bonds, in four index funds.
Designed by Rick Ferri (Bogleheads forum, 2007; core-4.com). Core-4 is a registered mark of Rick Ferri, LLC. The most cited version (80% stocks). Ferri's 2007 post gave 36/18/6/40.
Before the numbers. A hypothetical backtest, not a forecast: Jun 30, 2000 to Oct 9, 2026 (26.2 years), the window every published portfolio shares. Rebalanced once a year at 10 basis points a trade. The bar is the three-fund at the same stock share, 80%.
Funds younger than the window are extended by older series, each junction validated (how): BND by VBMFX before 2007-04-10; VNQ by VGSIX before 2004-09-29; VTI by VTSMX before 2001-06-15; VXUS by VGTSX before 2011-01-28.
What it holds
| Asset class, and the fund this backtest holds it through | Weight | Fund fee |
|---|---|---|
| US total stock market VTI · Vanguard Total Stock Market |
48% | 0.03% |
| International stocks (total) VXUS · Vanguard Total International Stock |
24% | 0.05% |
| US total bond market BND · Vanguard Total Bond Market |
20% | 0.03% |
| US real estate (REITs) VNQ · Vanguard Real Estate |
8% | 0.13% |
| Together | 100% | 0.04% |
The funds are the ones this backtest uses for each asset class, not a list to buy: any fund tracking the same asset class holds the same thing.
Its record against the three-fund at 80% stocks
| Statistic | Core Four | Three-fund at 80% stocks |
|---|---|---|
| Value per $10,000 | $64,643 | $59,824 |
| Total return | 546.43% | 498.24% |
| Annual return (CAGR) | 7.36% | 7.05% |
| Standard deviation | 12.35% | 12.43% |
| Max drawdown | -47.94% | -47.32% |
| Worst calendar year | -29.92% | -30.48% |
| Longest time underwater | 860 days | 1053 days |
| Ulcer Index | 10.92% | 11.82% |
| Sharpe ratio | 0.49 | 0.46 |
| Sortino ratio | 0.70 | 0.66 |
| Ulcer Performance Index | 0.50 | 0.44 |
The crises
| Deepest decline from a prior peak | Core Four | Three-fund at 80% stocks |
|---|---|---|
| 2000–02 | -31.7% | -35.8% |
| 2008 | -47.9% | -47.3% |
| 2020 | -28.5% | -27.9% |
| 2022 | -24.4% | -24.5% |
2000–02 is measured from June 2000, the window's start, after the March peak; 2008 from October 2007 to June 2009; 2020 from February to April; 2022 through 2023.
Calendar years
The first and last years are partial.
The trade-off
Rick Ferri’s Core Four keeps the three-fund’s total-market funds and adds REITs as a fourth, so real estate is held on purpose rather than only as part of the stock market. This is its most cited version, with 80% in stocks and REITs; Ferri’s 2007 post gave a version with 60% (36% US, 18% international, 6% REITs, 40% bonds), and core-4.com lists four risk levels.
The trade-off is one more fund to rebalance, and a REIT slice whose dividends are taxed mostly as ordinary income in a taxable account. Over this window it returned 7.36% a year with a worst decline of -47.9%; the three-fund at 80% stocks returned 7.05% with -47.3%.