Three-Fund Portfolio (Bogleheads) vs 60/40 Portfolio
30-year historical backtest comparison, $10,000 initial investment each.
Bottom line: The main difference is international stocks. The Three-Fund Portfolio adds global diversification the classic domestic 60/40 lacks, at similar overall risk.
Cumulative Growth
Key Metrics
| Strategy | CAGR | Max Drawdown | Volatility | Sharpe | Sortino |
|---|---|---|---|---|---|
| Three-Fund Portfolio (Bogleheads) | +8.18% | -32.2% | 9.8% | 0.65 | 0.99 |
| 60/40 Portfolio | +8.77% | -30.4% | 9.6% | 0.72 | 1.14 |
Annual Returns
| Strategy | '96 | '97 | '98 | '99 | '00 | '01 | '02 | '03 | '04 | '05 | '06 | '07 | '08 | '09 | '10 | '11 | '12 | '13 | '14 | '15 | '16 | '17 | '18 | '19 | '20 | '21 | '22 | '23 | '24 | '25 | '26 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three-Fund Portfolio (Bogleheads) | -1 | +15 | +12 | +11 | +2 | -1 | -6 | +4 | +6 | +4 | +6 | +0 | -23 | +26 | +15 | +3 | +10 | +11 | +8 | -3 | +12 | +17 | -2 | +14 | +13 | +8 | -8 | +10 | +13 | +16 | +7 |
| 60/40 Portfolio | -2 | +14 | +16 | +13 | -1 | -1 | -7 | +2 | +5 | +1 | +6 | -1 | -22 | +22 | +15 | +6 | +10 | +13 | +11 | -1 | +12 | +17 | 0 | +17 | +12 | +13 | -8 | +13 | +17 | +12 | +7 |
Three-Fund Portfolio (Bogleheads)
The simplest globally diversified index portfolio you can build with three funds.
60/40 Portfolio
The classic balanced benchmark that stocks-and-bonds investing is measured against.
Domestic versus global
A classic 60/40 often means US stocks and US bonds. The Bogleheads Three-Fund Portfolio splits equities between US and international markets and adds a total-bond position — typically something like 40% US stocks, 20% international, and 40% bonds.
So the headline difference is international diversification. Both remain simple, low-cost, index-based approaches.
Why international matters
Adding international stocks spreads country and currency risk and can help when US markets underperform, as they did for stretches of the 2000s. The downside is that international has lagged US equities for much of the past decade, so the Three-Fund has often trailed a US-only 60/40 recently.
Over full cycles, the diversification is a risk-management choice rather than a guaranteed return boost.
Which fits you
Choose the Three-Fund Portfolio if you want globally diversified equity exposure and believe in owning the whole world's markets. Choose a US-centric 60/40 if you prefer to keep it domestic. Their risk levels are similar; the bet is really US-only versus global.
Frequently Asked Questions
What is the difference between the Three-Fund Portfolio and 60/40?
The Three-Fund Portfolio adds international stocks and uses a total-bond fund, giving global equity diversification, while a classic 60/40 is often US stocks and US bonds only. Their overall risk is similar; the key difference is international exposure.
Is the Three-Fund Portfolio more diversified than 60/40?
Yes, on the equity side. By splitting stocks between US and international markets, the Three-Fund Portfolio spreads country and currency risk that a US-only 60/40 concentrates domestically.
Hypothetical historical performance based on backtested data. Past performance does not guarantee future results. This site is for educational purposes only and does not constitute investment advice. Full disclaimer