Wall Street experts have outlined a streamlined portfolio strategy, suggesting that individual investors may only need five specific investment funds to achieve broad market exposure and diversification. According to a report by Kiplinger, these recommendations cover U.S. equities, bonds, emerging markets, commodities, and real estate, aiming to balance growth with stability for long-term investors.
The five recommended funds
Financial advisors interviewed by Kiplinger selected specific exchange-traded funds (ETFs) and mutual funds that offer low costs and broad exposure. The selection prioritizes asset classes that behave differently under various economic conditions.
- Vanguard Equity-Income Fund Admiral Shares (VEIRX): Richard M. Rosso, director of financial planning at RIA Advisors, recommends this fund for U.S. stock exposure. It focuses on large-cap, undervalued companies with high dividends. Rosso notes that this approach helps avoid the "roller-coaster" returns that can stress retirement portfolios. The fund posted double-digit returns over the six-year period from 2016 to 2025, losing money only in 2018, with an expense ratio of 0.17%.
- iShares Core U.S. Aggregate Bond ETF (AGG): Sam Stovall, chief investment strategist at CFRA, suggests this ETF as "ballast" for a portfolio. With 99.99% of its holdings in investment-grade debt, it offers stability. Although recent returns through mid-September were weak, reflecting inflation pressures and falling bond prices, the fund's expense ratio is just 0.03%.
- Vanguard FTSE Emerging Markets Index ETF (VWO): Todd Rosenbluth, head of research at VettaFi, points to this fund for international diversification. It holds major companies like Taiwan Semiconductor Manufacturing, Alibaba, and Tencent. The fund has delivered an annualized return of 17.4% over the last three years through mid-September, with a low expense ratio of 0.06%.
- ABRDN Bloomberg All Commodity Longer Dated Strategy K-1 Free ETF (BCD): Also recommended by Rosenbluth, this fund provides exposure to energy, precious metals, and agricultural products. It offers a "better tax experience" due to its K-1 free structure. The fund saw a 34% gain in the 12 months leading up to mid-September, driven partly by rising oil prices. Its expense ratio is 0.3%.
- Vanguard Real Estate Index Fund ETF (VNQ): Stovall suggests including a small portion of real estate in a portfolio to capture the asset's cyclical price movements. The fund lost money in only two years between 2018 and 2025 and gained 8.9% this year through mid-September. The expense ratio is 0.13%.
Why this matters for investors
The core argument for this five-fund approach is simplicity and cost-efficiency. By using broad index funds and ETFs, investors can gain exposure to global markets without the need to pick individual stocks or manage complex derivatives. The low expense ratios highlighted in the report are significant; over decades, even small fee differences can compound into substantial savings for the investor.
