Rick Ferri Core Four: the Risk X-Ray
Ferri's Core Four adds exactly one idea to the three-fund portfolio: a slice of real estate, on the argument that REITs earn their place as a distinct asset class. That makes this page a controlled experiment, three-fund plus one variable, and the analysis below measures whether the 8% REIT slice actually changes the portfolio's risk structure or merely relabels equity.
Rick Ferri, All About Asset Allocation (2006); the 80/20 'growth' weighting
Analysis as of Friday 2026-08-28 · recomputed weekly from daily market data · methodology
What the Rick Ferri Core Four holds
The published allocation: 48% total US stocks, 24% international, 8% REITs, 20% bonds.
| Fund | Measured role | Weight | Expense ratio |
|---|---|---|---|
| VTI Vanguard Total Stock Market ETF | correlated core | 48% | 0.03% |
| VEA Vanguard FTSE Developed Markets ETF | correlated core | 18% | 0.03% |
| VWO Vanguard FTSE Emerging Markets ETF | correlated core | 6% | 0.06% |
| VNQ Vanguard Real Estate ETF | correlated core | 8% | 0.13% |
| BND Vanguard Total Bond Market ETF | shock absorber | 20% | – |
International implemented as VEA plus VWO in a 3-to-1 split.
Where the risk actually sits
Measured through the covariance matrix, VTI dominates the risk budget at 60.3% of total risk for 48.0% of capital; at the other end, BND accounts for only 3.4%.
| Fund | Share of risk | Risk | Capital | Beta | Role |
|---|---|---|---|---|---|
| VTI | 60.3% | 48.0% | 1.01 | correlated core | |
| VEA | 21.6% | 18.0% | 0.79 | correlated core | |
| VNQ | 8.2% | 8.0% | 0.59 | correlated core | |
| VWO | 6.5% | 6.0% | 0.75 | correlated core | |
| BND | 3.4% | 20.0% | 0.06 | shock absorber |
How the pieces move together
VTI + VEA + VWO move as one block (average correlation 0.77): together they are 72.0% of the capital and 88.4% of the risk.
| Holding | VTI | VEA | VWO | VNQ | BND |
|---|---|---|---|---|---|
| VTI 48% | 1.00 | ||||
| VEA 18% | 0.77 | 1.00 | |||
| VWO 6% | 0.71 | 0.83 | 1.00 | ||
| VNQ 8% | 0.55 | 0.56 | 0.42 | 1.00 | |
| BND 20% | 0.20 | 0.26 | 0.21 | 0.57 | 1.00 |
Pearson correlation of weekly returns · 156-week common window ending 2026-08-28 · pairbook.io
The worst it would have been
Over the analysis window, this mix would have fallen at worst -10.6% (from the week of 2025-02-21 to 2025-04-11), shallower than the S&P 500's -16.9% over the same weeks, and it has since recovered that peak.
Worst weeks of the mix: -6.6% (week ending 2025-04-11), -3.1% (week ending 2026-03-13), -2.7% (week ending 2024-09-13).
FAQ
Is 8% REITs enough to matter?
Measurably but modestly: the risk-contribution table shows VNQ's share, and the block analysis shows whether the market treats it as its own asset class or as part of the equity block in the current regime.
Core Four or Three-Fund?
Both pages run the identical analysis, so the comparison is direct: if VNQ clusters with the stock block above, the simpler portfolio wins on parsimony; if it stands apart, Ferri's argument holds in today's data.
Run this analysis on your own portfolio
The same X-ray, risk contributions, correlation blocks, ETF overlap, runs on any mix of 4,700+ US stocks and ETFs: paste your holdings into the free portfolio X-ray, or ask an AI assistant with the PairBook MCP server.
