Can three funds be a whole portfolio?

Yes, and most professionally built portfolios are a version of it with more lines. This lesson assembles one from funds this course has measured, so that the allocation course's mix has real tickers, real fees and real concentrations attached.

The three jobs, and a fund for each

The allocation course said what each class is for. Here is a fund that does each job, with its fee as read on 2026-09-04:

• Growth — global equities. SPY.US for the US at 0.095%, and EFA.US for developed markets outside it at 0.33%. Together, most of the world's listed companies by value, in two lines.
• Income and ballast — investment-grade bonds. AGG.US at 0.03%, thousands of US government and corporate bonds.
• Spendable money — cash equivalents. BIL.US at 0.136%, Treasury bills maturing in weeks.

Four tickers, one of which many builders fold into the first. Weighted 60/40 between equities and bonds — the reference mix the allocation course discussed — the blended fee is about 0.10% a year. The sum a person pays to own most of the world, in funds that each keep themselves at index weights — the mix between them is the holder's to rebalance, and the next section says why that is cheap.

What this course adds to the mix

Each line now carries what you have learned to check. The equity funds are capitalisation-weighted, so a third of the US line is ten companies. The foreign line is unhedged, so it carries a currency position. The bond fund's holdings do not trade like shares, so its liquidity in a crisis is the bond market's. All four are physical, US-domiciled, distributing. None of that is a problem; all of it is what you own, and the point of the course is that you can now say so.

Where the extra lines come from

Real portfolios grow lines for reasons, and each reason is a lesson in this domain:

• a small-cap line (IWM.US) because the capitalisation-weighted core under-holds small companies;
• a long-bond line (TLT.US) for holders who want more rate sensitivity than the aggregate fund carries, at the cost the seesaw lesson measured in 2022;
• a real-assets line (GLD.US, or a commodity fund with its roll understood) for inflation regimes;
• a high-yield line (HYG.US) that behaves like equity in a crisis, as the asset-class lesson warned.

Every extra line should answer "what job does this do that the core does not", in one sentence. A line without a sentence is a collection, not a portfolio — the same rule the dashboard course applied to layouts.

Rebalancing is where the wrapper helps

The allocation course's rebalancing lesson said to sell what grew and buy what shrank on a schedule. With ETFs that is a handful of trades a year at the spreads the liquidity lesson measured, and the creation mechanism means your trades do not disturb the funds. With mutual funds it is orders filled at an unknown evening price. With a closed-end fund it is a negotiation with the discount. The three-fund core is cheap to hold and cheap to maintain, and the second half is the one people forget to price.

In the data

The four funds' own records, SPY, EFA, AGG and BIL in that order, give the fees to blend and the sizes and concentrations to add up:

The fees are the only cost in the portfolio known in advance. The returns to combine at your weights are on the charts below, and how far those lines move together is the portfolio-theory course's engine.

Try it now

1. Read the four fees off the four records above and compute the blended fee for a 40/20/30/10 mix of US equity, foreign equity, bonds and cash. Then for 60/0/40/0. The difference is what the foreign line costs to include.

2. Now the three engines over the same five years, so you can see the mix rather than compute it:

3. Measure the sharpest fall on each. Write down what a 60/40 mix would have fallen at that moment, weights times falls, and compare it with the equity fund alone. That number is the only reason the bond line exists, and this course has now shown you what it costs to hold.