Bogleheads Three-fund Portfolio
The three-fund portfolio is a portfolio popularized by Jack Bogle fans (boggleheads). It uses only three fundamental asset classes: a U.S total stock market fund, a total international stock market fund, and a total bond market fund. The portfolio could be replicated using three low-cost ETFs.
Asset Allocation
| Position | Category/Sector | Target Weight |
|---|---|---|
BND Vanguard Total Bond Market ETF | Total Bond Market | 20% |
VEA Vanguard FTSE Developed Markets ETF | Foreign Large Cap Equities | 30% |
VTI Vanguard Total Stock Market ETF | Large Cap Growth Equities | 50% |
Performance
Performance Chart
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The earliest data available for this chart is Jul 26, 2007, corresponding to the inception date of VEA
Returns By Period
As of May 14, 2025, the Bogleheads Three-fund Portfolio returned 4.54% Year-To-Date and 8.23% of annualized return in the last 10 years.
| YTD | 1M | 6M | 1Y | 5Y* | 10Y* | |
|---|---|---|---|---|---|---|
^GSPC S&P 500 | 0.08% | 9.75% | -1.63% | 12.74% | 15.66% | 10.77% |
| Bogleheads Three-fund Portfolio | 4.54% | 8.15% | 2.94% | 11.36% | 12.13% | 8.23% |
| Portfolio components: | ||||||
VTI Vanguard Total Stock Market ETF | 0.15% | 10.50% | -1.75% | 13.52% | 16.93% | 12.09% |
BND Vanguard Total Bond Market ETF | 1.82% | 0.70% | 1.61% | 5.03% | -1.00% | 1.41% |
VEA Vanguard FTSE Developed Markets ETF | 13.51% | 9.35% | 11.50% | 10.74% | 12.56% | 5.59% |
Monthly Returns
The table below presents the monthly returns of Bogleheads Three-fund Portfolio, with color gradation from worst to best to easily spot seasonal factors. Returns are adjusted for dividends.
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | Total | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2.97% | 0.17% | -2.83% | 0.90% | 3.38% | 4.54% | |||||||
| 2024 | 0.20% | 3.21% | 2.92% | -3.68% | 4.11% | 1.22% | 2.32% | 2.23% | 1.60% | -2.40% | 3.75% | -2.90% | 12.89% |
| 2023 | 6.83% | -2.78% | 2.68% | 1.44% | -1.14% | 4.68% | 2.75% | -2.29% | -4.04% | -2.64% | 8.25% | 5.04% | 19.40% |
| 2022 | -4.60% | -2.26% | 1.23% | -7.39% | 0.55% | -7.16% | 6.73% | -4.17% | -8.41% | 5.63% | 7.12% | -3.75% | -16.74% |
| 2021 | -0.55% | 1.99% | 2.43% | 3.61% | 1.32% | 1.14% | 1.26% | 1.79% | -3.46% | 4.31% | -2.09% | 3.11% | 15.60% |
| 2020 | -0.54% | -5.92% | -11.50% | 9.21% | 4.56% | 2.34% | 3.96% | 4.98% | -2.41% | -2.15% | 10.39% | 4.10% | 15.91% |
| 2019 | 6.74% | 2.50% | 1.26% | 2.81% | -4.48% | 5.51% | 0.13% | -1.06% | 1.69% | 2.08% | 2.30% | 2.48% | 23.76% |
| 2018 | 3.79% | -3.65% | -0.97% | 0.44% | 1.07% | -0.13% | 2.34% | 1.34% | 0.20% | -6.45% | 1.28% | -5.82% | -6.91% |
| 2017 | 2.07% | 2.28% | 0.95% | 1.35% | 1.68% | 0.67% | 1.89% | 0.25% | 1.88% | 1.61% | 1.76% | 1.19% | 19.05% |
| 2016 | -4.27% | -0.73% | 5.77% | 1.10% | 0.77% | -0.07% | 3.36% | 0.17% | 0.61% | -2.01% | 1.28% | 1.81% | 7.72% |
| 2015 | -0.67% | 4.41% | -0.84% | 1.40% | 0.53% | -1.94% | 1.47% | -5.27% | -2.45% | 6.00% | 0.00% | -1.75% | 0.38% |
| 2014 | -2.84% | 4.27% | 0.12% | 0.66% | 1.79% | 1.64% | -1.76% | 2.38% | -2.39% | 1.41% | 1.42% | -1.10% | 5.48% |
Expense Ratio
Bogleheads Three-fund Portfolio has an expense ratio of 0.04%, which is considered low. Below, you can find the expense ratios of the portfolio's funds side by side and easily compare their relative costs.
Risk-Adjusted Performance
Risk-Adjusted Performance Rank
The current rank of Bogleheads Three-fund Portfolio is 57, indicating average performance compared to other portfolios on our website. Here’s a breakdown of how it compares using common performance measures.
Risk-Adjusted Performance Indicators
This table presents a comparison of risk-adjusted performance metrics for positions. Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.
| Sharpe ratio | Sortino ratio | Omega ratio | Calmar ratio | Martin ratio | |
|---|---|---|---|---|---|
VTI Vanguard Total Stock Market ETF | 0.67 | 1.09 | 1.16 | 0.71 | 2.69 |
BND Vanguard Total Bond Market ETF | 0.96 | 1.33 | 1.16 | 0.38 | 2.33 |
VEA Vanguard FTSE Developed Markets ETF | 0.63 | 1.00 | 1.13 | 0.80 | 2.42 |
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Dividends
Dividend yield
Bogleheads Three-fund Portfolio provided a 2.27% dividend yield over the last twelve months.
| TTM | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2.27% | 2.37% | 2.28% | 2.23% | 1.95% | 1.77% | 2.34% | 2.59% | 2.19% | 2.38% | 2.38% | 2.54% |
| Portfolio components: | ||||||||||||
VTI Vanguard Total Stock Market ETF | 1.30% | 1.27% | 1.44% | 1.67% | 1.21% | 1.42% | 1.78% | 2.04% | 1.71% | 1.92% | 1.98% | 1.76% |
BND Vanguard Total Bond Market ETF | 3.77% | 3.67% | 3.09% | 2.60% | 1.97% | 2.22% | 2.72% | 2.81% | 2.54% | 2.51% | 2.57% | 2.79% |
VEA Vanguard FTSE Developed Markets ETF | 2.89% | 3.36% | 3.16% | 2.91% | 3.16% | 2.04% | 3.04% | 3.35% | 2.77% | 3.05% | 2.92% | 3.68% |
Drawdowns
Drawdowns Chart
The Drawdowns chart displays portfolio losses from any high point along the way. Drawdowns are calculated considering price movements and all distributions paid, if any.
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Worst Drawdowns
The table below displays the maximum drawdowns of the Bogleheads Three-fund Portfolio. A maximum drawdown is a measure of risk, indicating the largest reduction in portfolio value due to a series of losing trades.
The maximum drawdown for the Bogleheads Three-fund Portfolio was 47.74%, occurring on Mar 9, 2009. Recovery took 539 trading sessions.
The current Bogleheads Three-fund Portfolio drawdown is 0.37%.
Depth | Start | To Bottom | Bottom | To Recover | End | Total |
|---|---|---|---|---|---|---|
| -47.74% | Nov 1, 2007 | 339 | Mar 9, 2009 | 539 | Apr 27, 2011 | 878 |
| -28.12% | Feb 13, 2020 | 27 | Mar 23, 2020 | 95 | Aug 6, 2020 | 122 |
| -24.47% | Nov 9, 2021 | 235 | Oct 14, 2022 | 329 | Feb 7, 2024 | 564 |
| -17.25% | May 2, 2011 | 108 | Oct 3, 2011 | 111 | Mar 13, 2012 | 219 |
| -15.25% | Jan 29, 2018 | 229 | Dec 24, 2018 | 81 | Apr 23, 2019 | 310 |
Volatility
Volatility Chart
The chart below shows the rolling one-month volatility.
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Diversification
Diversification Metrics
Number of Effective Assets
The portfolio contains 3 assets, with an effective number of assets of 2.63, reflecting the diversification based on asset allocation. This number of effective assets suggests a highly concentrated portfolio, where a few assets dominate the allocation, potentially increasing the portfolio's risk due to lack of diversification.
Asset Correlations Table
| ^GSPC | BND | VEA | VTI | Portfolio | |
|---|---|---|---|---|---|
| ^GSPC | 1.00 | -0.16 | 0.83 | 0.99 | 0.96 |
| BND | -0.16 | 1.00 | -0.10 | -0.16 | -0.08 |
| VEA | 0.83 | -0.10 | 1.00 | 0.83 | 0.94 |
| VTI | 0.99 | -0.16 | 0.83 | 1.00 | 0.97 |
| Portfolio | 0.96 | -0.08 | 0.94 | 0.97 | 1.00 |
AI Insight on Diversification
The portfolio is moderately diversified with a mix of bond and equity positions that exhibit varying degrees of correlation. The correlation matrix reveals that the two equity funds, VEA (developed international markets) and VTI (U.S. total stock market), are highly correlated at 0.83, indicating these positions move closely together and thus provide limited diversification benefit relative to each other. In contrast, the bond fund BND shows low to slightly negative correlations with both equity funds (−0.1 with VEA and −0.16 with VTI), which helps reduce overall portfolio volatility and enhances diversification.
Examining the correlations of the portfolio with individual positions, the portfolio correlates very strongly with VTI (0.97) and VEA (0.94), but only weakly negatively with BND (−0.08). This suggests that the portfolio’s performance is heavily influenced by the equity components, particularly the U.S. stock market exposure through VTI. The bond allocation, while beneficial for diversification, has a relatively small impact on the portfolio’s overall behavior.
Given these correlations, VTI appears to dominate the portfolio’s risk and return profile, followed closely by VEA. The bond position, although less influential, plays a crucial role in dampening portfolio volatility due to its low correlation with equities. Overall, the portfolio is well diversified across asset classes (bonds and stocks) but somewhat concentrated within equities, as the two equity funds are strongly correlated and jointly dominate the portfolio’s movements. This structure aligns with the classic Bogleheads Three-fund approach, balancing broad market equity exposure with fixed income to achieve diversification benefits.