Three-Fund Portfolio

Moderate Classic Allocation

The Bogleheads' favorite. Total US market, total international, and total bond — maximum diversification with minimum fuss. Rebalance yearly and forget about it.

3
ETFs
2.3%
Aggregate Yield
$88.6B
Wtd Avg AUM

Holdings

Symbol Name Weight Price 1D 3M YTD Yield AUM
ITOT iShares Core S&P Total U.S. Stock Market ETF 50% $148.68 ... ... ... 1.1% $83.4B
IXUS iShares Core MSCI Total International Stock ETF 30% $91.31 ... ... ... 3.0% $55.2B
BND Vanguard Total Bond Market 20% $73.64 ... ... ... 3.3% $151.6B

Investment Thesis

Jack Bogle popularized the idea that broad, low-cost index investing beats most active managers over time. The three-fund portfolio takes this to its logical conclusion: own everything, everywhere, at the lowest possible cost. Adding international exposure reduces concentration in the US market, which has dominated returns recently but historically goes through long periods of underperformance relative to the rest of the world. The 50/30/20 split gives meaningful international diversification without abandoning the US market that has the deepest, most liquid equities in the world. Yearly rebalancing forces a disciplined 'buy low, sell high' behavior that most investors struggle to execute emotionally.

Portfolio Construction

ITOT iShares Core S&P Total U.S. Stock Market ETF
50%
US stock market core — the largest, most liquid equity market in the world. Covers large, mid, and small-cap stocks, giving you exposure to both established blue chips and emerging growth companies.
Yield: 1.1% AUM: $83.4B
IXUS iShares Core MSCI Total International Stock ETF
30%
International diversification — developed and emerging markets outside the US. Reduces home-country bias and provides exposure to 4,000+ stocks across Europe, Asia, and Latin America.
Yield: 3.0% AUM: $55.2B
BND Vanguard Total Bond Market
20%
Bond ballast — stabilizes the portfolio during equity drawdowns and provides a steady income stream. The 20% allocation is lighter than the 60/40, reflecting a longer time horizon.
Yield: 3.3% AUM: $151.6B

Key Considerations

  • International stocks have lagged US stocks for over a decade — requires patience
  • Currency fluctuations add an extra source of volatility
  • Simple allocation may feel too passive during market euphoria or panic
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