If Ben Felix Uses One Fund, Do You Need Ten? When Diversification Becomes Clutter

In June 2026, Ben Felix joined Rick Ferri on the Bogleheads on Investing podcast to talk about simple investing, all-in-one funds, and 100% stock portfolios.¹ Felix co-hosts the Rational Reminder podcast, runs the Common Sense Investing YouTube channel, and has spent a decade reading and summarizing the academic literature on factor investing, expected returns, and portfolio construction. If anyone has an excuse to run a twelve-fund portfolio with carefully calibrated sleeves, it is him. In the episode, he describes holding his public-market equity allocation in a single Dimensional global equity fund.

That surprises people, and it puts real weight behind a question worth asking precisely. “How many funds should I own?” has no answer on its own, because fund count is an implementation detail. The load-bearing question is what exposures, costs, taxes, and behavioral risks your funds create, given the accounts you have. One warning before the details: do not copy the ticker. Copy the reasoning.

One fund can be sophisticated

The fund Felix describes is the kind Dimensional builds for Canadian advisors: a global equity portfolio that wraps a complete strategy inside one wrapper. Dimensional’s Global Equity Portfolio, for example, is a Canada-domiciled fund of funds with a management expense ratio near 0.29% that holds thousands of stocks across Canadian, US, international, and emerging markets, with a deliberate home-country bias and systematic tilts toward smaller, cheaper, more profitable companies.² Global diversification, factor exposure, and automatic internal rebalancing all live inside a single line item on his statement.

That is the first lesson: a one-fund portfolio can carry a lot of thinking. Vanguard’s Total World Stock ETF (VT) holds roughly 10,000 stocks across nearly 50 markets, tracks the FTSE Global All Cap Index, and costs 0.06% a year.³ A target-date index fund adds bonds and an age-based glide path on top of global stock exposure, which is why it is the strongest one-fund default for most retirement savers, a case I make in the asset allocation debate. Canadians have one-ticket all-equity ETFs such as XEQT and VEQT with management fees near 0.2%,⁴ and since March 2026 an Avantis-managed option, CAGE, that packages a global factor-tilted equity strategy for a 0.28% management fee, though it is new enough that it has no live track record yet.⁵

Felix’s specific fund does not transfer to a US investor. It is sold through Canadian advisors, it overweights Canada on purpose, and its tax logic is built around Canadian registered accounts. What transfers is the pattern: a highly informed investor looked at all the complexity available to him and chose to compress it into one holding he never has to touch.

What diversification measures

Diversification and fund count are different quantities. Diversification counts independent sources of risk and return. Complexity counts the decisions you have to manage. A single fund holding 10,000 stocks across 50 countries is broadly diversified. A twelve-fund portfolio where every fund holds the same US large-cap stocks is concentrated with extra paperwork, a pattern I dissected in the tech bro portfolio.

The case for owning the whole market broadly is among the strongest results in empirical finance. Markowitz formalized the idea that risk and return should be judged at the portfolio level rather than position by position.⁶ Bessembinder then showed why breadth matters so much in practice: since 1926, the best-performing 4% of US companies account for the market’s entire net wealth creation above Treasury bills, and most individual stocks underperform T-bills over their lifetimes.⁷ Miss the handful of big winners and you miss the equity premium, which is an argument for owning everything, cheaply, forever.

The case for some deliberate deviation from the market portfolio comes from the factor literature. Fama and French documented that size, value, and later profitability and investment patterns explain persistent differences in average returns.⁸ Whether that evidence should change your portfolio is a separate question, one I work through in Is Factor Investing Dead? The point here is narrower: nothing in the academic evidence says the expression of a strategy needs many funds. Felix’s single fund is factor-tilted. VT is not. Both are diversified. Fund count told you nothing about either property.

The complexity ladder

Portfolios sit on a ladder of complexity, and each rung is rational for someone. The failure mode is climbing rungs without gaining anything at each step.

Level 1: One fund

VT, a target-date index fund, a one-ticket ETF, or a Dimensional global equity portfolio. This level suits 401(k) investors with a good low-cost target-date option, young accumulators who want 100% stocks and understand that 40% to 60% drawdowns come with that choice, and anyone who knows from experience that a more complicated portfolio tempts them to tinker. At this level the fund does the rebalancing, and the investor’s only job is to keep contributing.

Level 2: Three funds, one idea

This is where my own money sits. The Simplified Engineer Investor Portfolio holds 36% VTI, 24% VXUS, and 40% AVGV: a US total market core at 0.03%, an international total market core at 0.05%, and one global value fund at 0.26% that wraps six Avantis value ETFs (AVLV, AVUV, AVIV, AVDV, AVES, and AVMV) into a single holding.⁹ Three funds, but one idea: own global equities at market weight, then tilt toward value and profitability through a single fund that rebalances its own sleeves internally.

The earlier version of that portfolio held eight funds, with separate US small value, international small value, emerging value, and quality sleeves. Collapsing them into AVGV gave up a little precision and got back a portfolio I can rebalance in minutes and explain in a sentence. Every rung of the ladder below should be judged by that same trade. The three-fund version also keeps two practical controls a one-fund portfolio gives up, which the tax section below covers.

Level 3: One household, many wrappers

A real household might hold a target-date fund in one spouse’s 401(k), an S&P 500 fund in the other’s (because that is the best option on the menu), VTI and VXUS in taxable, and a bond fund in an IRA. That can look like five strategies. Done right, it is one strategy implemented across account wrappers, with each asset placed where it is taxed best. The account labels are packaging; risk and return live at the household level. I cover that framework in You Have One Household Portfolio. Complexity that exists because tax law and 401(k) menus force it is implementation complexity, and it is often worth carrying.

Level 4: Different return drivers

Some investors add complexity to diversify across economic regimes rather than to boost expected returns. The Hungry Caterpillar Portfolio spreads risk across stocks, long Treasuries, cash, gold, and managed futures so that no single regime (growth, recession, inflation) dominates the outcome. That is more funds in exchange for genuinely different return drivers, which is the one thing extra equity funds cannot buy. The price is tracking error against stocks in bull markets and more moving parts, and the guide is explicit about who should not hold it.

Level 5: Institutional machinery

Yale runs dozens of managers across private equity, venture, real assets, and absolute return, and it has the perpetual horizon, tax-exempt status, staff, and manager access to make that work. Households have none of those advantages, which is why my Yale endowment guide lands on copying the discipline (written policy, diversification, rebalancing) and skipping the structure. Sophistication only pays when you have the machinery required to benefit from it.

Level 6: Expensive complexity with a high hurdle

At the top of the ladder sit liquid alternatives: managed futures, style premia, market-neutral funds. These can add return streams a stock and bond portfolio cannot replicate, and they can also cost 1.5% or more a year and underperform for half a decade. My AQR funds guide sets the hurdle: if the goal is “better returns,” the case is weak; if the goal is a diversifying return stream you understand and can hold through the bad stretch, the case deserves a hearing. Very few investors clear that hurdle, and clearing it requires more conviction than a backtest.

Sometimes more funds are about taxes

Taxes are where the one-fund versus multi-fund choice stops being a matter of taste. For a US investor with a taxable account, the same exposure held as one fund or as two funds can produce different after-tax results. Three mechanisms matter.

The foreign tax credit. Foreign governments withhold tax on dividends before they reach a US fund. When a fund holds more than 50% foreign securities, it can elect under Section 853 to pass those foreign taxes through to you, reported in box 7 of your 1099-DIV, and you can generally claim them as a credit against your US tax.¹⁰ A pure international fund like VXUS qualifies. VT, with US stocks around 60% of its weight, does not meet the 50% foreign-asset threshold, so its foreign withholding is simply lost to you. The credit also only exists in taxable accounts: foreign taxes paid inside a 401(k) or IRA are not creditable because the income is not currently taxed.¹¹ If your total creditable foreign taxes are under $300 (single) or $600 (married filing jointly), you can usually claim the credit without filing Form 1116 at all.¹² The dollars are modest, on the order of a couple hundred a year per $100,000 in an international fund, but they recur every year and cost nothing to collect once the funds are separated.

Tax-loss harvesting. Holding VTI and VXUS separately means that in a year when international stocks fall while US stocks rise, you can harvest the international loss while leaving the US position untouched. One blended fund only shows you the netted result.

Asset location. Separate funds let you place each asset where it is taxed best across taxable, traditional, and Roth accounts. Vanguard’s research on asset location supports the practice and adds a caveat worth repeating: the old rule of thumb that international stocks always belong in taxable is not universally right, because the answer depends on the fund’s yield, the share of its dividends that are qualified, and your bracket.¹³ Treat international-in-taxable as a review flag rather than a law.

401(k) menus push in the same direction. Most plans offer no global all-in-one index fund, so approximating one takes a US stock fund, an international stock fund, and a bond fund. An investor who holds three funds in a 401(k), two in taxable, and a target-date fund in an IRA did not choose complexity. The wrappers imposed it, and the right response is the household-level view from Level 3, coordinated so the totals land on target.

None of this makes VT a mistake. In a Roth IRA or an HSA, where the foreign tax credit is unavailable and harvesting is irrelevant, VT or a target-date fund is close to unbeatable. The tax argument for more funds applies to taxable accounts, and it caps out quickly: US stocks, international stocks, and bonds held separately capture nearly all of the benefit. A fourth slice rarely adds a tax advantage; it adds bookkeeping.

The costs of complexity

Complexity has running costs, and the biggest one is behavioral. Morningstar’s Mind the Gap study finds that over the ten years through 2024, the average fund investor earned 7.0% a year while their funds returned 8.2%, a gap of roughly 1.2 percentage points per year lost to the timing of purchases and sales.¹⁴ Every additional line item on a statement is another position that can underperform, another temptation to sell the laggard and chase the leader, another chance to convert a plan into a series of reactions.

Complexity also invites activity dressed up as skill. SPIVA’s year-end 2025 scorecard reports that 79% of active US large-cap funds underperformed the S&P 500 in 2025 alone, and roughly 90% of domestic equity funds underperformed over the trailing 20 years.¹⁵ Professional managers with research staffs fail to overcome the costs of their own activity most of the time. A DIY investor rearranging nine funds every quarter is running the same experiment with less information.

Small positions deserve particular suspicion. A 3% sleeve that doubles adds 3% to your wealth, an outcome a diversified portfolio produces in a decent month. If a position is too small to change your outcome, it exists for a reason other than return: usually curiosity, boredom, or the memory of a persuasive thread. Fold it into the core or size it to matter.

Five questions before you add a fund

Before any new fund enters the portfolio, it should survive five questions:

• Exposure. What source of risk and return does this add that I do not already own?
• Cost. Does it lower or raise my all-in expense ratio, spreads included?
• Tax. Does it improve after-tax outcomes in the account where I will hold it, or does it create avoidable distributions and rebalancing taxes?
• Behavior. Will I still hold it after five years of underperformance, and can I write down today what would make me sell?
• Operations. Can I rebalance, track, and explain the portfolio that results, without a spreadsheet error doing more damage than the fund adds?

“More diversification” is not an answer to the first question; a specific exposure is. “It backtested well” and “I saw it on Twitter” fail the fourth question on contact. Applied honestly, this test approves a bond fund for a near-retiree, approves VXUS in taxable for the credit and the harvesting, approves one factor fund for an investor who has read the evidence, and rejects most of what actually accumulates in brokerage accounts: the second S&P 500 fund, the 2% gold position, the thematic ETF from 2021.

The scorecard below applies the same logic to your current lineup. It does not know the best portfolio. It flags whether each layer of complexity you carry is buying exposure, tax efficiency, or nothing.

What I recommend

If your investing happens inside a 401(k) or IRA: use a low-cost target-date index fund or an all-in-one fund and stop there. One fund, internally rebalanced, age-appropriate. Nothing in this article argues for more.

If you are a young accumulator who wants 100% stocks: VT or a one-ticket equity ETF is a complete answer, provided you have seen what a 50% drawdown does to an all-equity portfolio and expect to hold through it.

If you have a meaningful taxable account: consider splitting the core into VTI and VXUS (and a bond or Treasury fund if your allocation calls for one). Three funds capture the foreign tax credit, enable tax-loss harvesting, and give you asset-location control. That is the full tax argument; a fourth fund needs its own justification.

If you believe the factor evidence: add one broad tilt fund and treat the position as permanent. My version is 40% AVGV alongside VTI and VXUS. A tilt you abandon after three bad years is worse than no tilt, because you pay the tracking error without collecting the premium.

If you are within ten years of spending the money: the one-fund-forever framing quietly assumes accumulation. Retirees need safe assets to fund near-term withdrawals, which usually means adding a bond or TIPS fund rather than admiring the simplicity of 100% equities.

If alternatives tempt you: read the Level 4 and Level 6 guides first, size the sleeve so it matters (10% or more, or do not bother), and accept in writing that it will underperform stocks for stretches measured in years.

Across all six cases the ceiling is similar: one to four core funds per goal covers nearly everyone, with factor tilts and alternatives as deliberate additions on top for the investors who can hold them. I have never seen a household portfolio that needed ten funds for any reason other than history.

Frequently Asked Questions

How many funds should I own?

For most DIY investors, one to four core funds per goal: either a single all-in-one fund, or a US stock fund, international stock fund, and bond fund, plus at most one deliberate tilt. More funds are reasonable only when each solves a named problem such as tax-loss harvesting, the foreign tax credit, a limited 401(k) menu, or regime diversification through genuinely different assets.

Is VT enough by itself?

For all-equity money in a tax-advantaged account, yes. VT holds roughly 10,000 stocks across US, developed, and emerging markets for 0.06%. Its limitations are that it holds no bonds, and in a taxable account it has generally not qualified to pass through the foreign tax credit and cannot be harvested US-versus-international. Investors who care about those things hold VTI and VXUS separately.

Should I hold VT or VTI plus VXUS in a taxable account?

VTI plus VXUS is usually the better taxable pairing: VXUS passes through the foreign tax credit on its dividends, either fund can be tax-loss harvested independently, and the two-fund version costs slightly less. The price is one rebalancing decision per year and the temptation to fiddle with the US/international split. If that temptation is a real risk for you, VT’s simplicity is worth more than the credit.

What fund does Ben Felix use?

In the June 2026 Bogleheads on Investing episode, Felix describes holding his public-market equities in a single Dimensional global equity fund: a Canadian, advisor-channel portfolio with global diversification, a home-country bias, and factor tilts, at a fee near 0.3%. The fund itself is not available to US retail investors, and his Canadian account structure does not map to US tax law, which is why the useful takeaway is his reasoning rather than his ticker.

Do I get the foreign tax credit in a 401(k) or IRA?

No. Foreign taxes withheld inside tax-advantaged accounts are not creditable, because the account’s income is not currently subject to US tax. The credit only applies to funds held in taxable accounts, where a fund with more than 50% foreign holdings passes the taxes through on your 1099-DIV. This is one reason a household might prefer international funds in taxable, subject to the yield and bracket caveats in Vanguard’s asset-location research.

Key Takeaways

• Diversification counts exposures; complexity counts decisions. One fund holding 10,000 stocks is diversified. Twelve overlapping funds are one bet with extra statements.
• One fund can carry a whole strategy. Ben Felix’s single Dimensional fund contains global diversification, factor tilts, and automatic rebalancing. VT and target-date index funds compress similar thinking into one ticker.
• Taxes are the strongest reason to hold more funds. Separate US and international funds in taxable capture the foreign tax credit, enable tax-loss harvesting, and allow asset location. Those benefits stop at about three or four funds.
• Behavior is a portfolio constraint. Investors lose roughly 1.2 percentage points a year to timing, and every extra position is another invitation to tinker.
• Every fund needs a job. Exposure, cost, tax, behavior, operations. A fund that cannot pass those five questions is clutter, whatever its backtest says.

Related Guides

• The Simplified Engineer Investor Portfolio: the three-fund, one-idea portfolio this article describes, in full detail.
• You Have One Household Portfolio: how a messy map of accounts becomes one coherent strategy.
• The Case for Global Equity Diversification: why the international sleeve exists at all.
• The Asset Allocation Debate: target-date funds, 60/40, and 100% stocks as answers to different problems.
• The Hungry Caterpillar Portfolio: complexity justified by different return drivers.
• Should You Invest Like Yale?: institutional complexity and why it does not travel.
• AQR Funds for Bogleheads: the high hurdle for expensive complexity.

Sources

1. Bogle Center for Financial Literacy, “Ben Felix on Simplicity, Private Equity, Factor Investing, & Living a Good Life,” Bogleheads on Investing Episode 95, June 28, 2026. boglecenter.net.
2. Dimensional Fund Advisors Canada, Global Equity Portfolio (Class F) fund page (MER approximately 0.29%; global fund of funds with Canadian home bias). dimensional.com.
3. Vanguard, Total World Stock ETF (VT) profile (0.06% expense ratio, approximately 10,000 holdings, FTSE Global All Cap Index); VTI (0.03%) and VXUS (0.05%) fund pages. vanguard.com.
4. Vanguard Canada, All-Equity ETF Portfolio (VEQT) fact sheet; management fee reduced to 0.17% effective November 2025, MER near 0.2%. vanguard.ca.
5. CIBC Asset Management, Avantis CIBC All-Equity Asset Allocation ETF (CAGE) fund page (launched March 2026; 0.28% management fee). cibc.com.
6. Harry Markowitz, “Portfolio Selection,” Journal of Finance 7(1), 1952. jstor.org.
7. Hendrik Bessembinder, “Do Stocks Outperform Treasury Bills?” Journal of Financial Economics 129(3), 2018 (top ~4% of firms account for all net wealth creation; most stocks underperform T-bills over their lifetimes). ssrn.com.
8. Eugene Fama and Kenneth French, “Common Risk Factors in the Returns on Stocks and Bonds,” Journal of Financial Economics 33(1), 1993. sciencedirect.com.
9. Avantis Investors, All Equity Markets Value ETF (AVGV) fund page (0.26% expense ratio; fund of funds holding AVLV, AVUV, AVIV, AVDV, AVES, and AVMV). avantisinvestors.com.
10. IRS, Instructions for Form 1099-DIV (box 7, foreign tax paid; pass-through election under IRC §853 for funds with more than 50% foreign assets). irs.gov.
11. IRS, “Foreign Taxes That Qualify for the Foreign Tax Credit” (credit unavailable for taxes on income not subject to US tax, including tax-advantaged retirement accounts). irs.gov.
12. IRS, Publication 514, Foreign Tax Credit for Individuals (Form 1116 exemption when creditable foreign taxes do not exceed $300 single / $600 married filing jointly and all foreign income is qualified passive income). irs.gov.
13. Vanguard, “Revisiting the Conventional Wisdom Regarding Asset Location” (2022) and “Asset Location for Equity” (2023). vanguard.com.
14. Morningstar, “Mind the Gap 2025” (investors earned 7.0% vs 8.2% for their funds over the ten years ended December 2024). morningstar.com.
15. S&P Dow Jones Indices, SPIVA U.S. Scorecard, Year-End 2025 (79% of active large-cap funds underperformed the S&P 500 in 2025; roughly 90% of domestic equity funds underperformed over 20 years). spglobal.com. Figures are point-in-time and were verified against issuer, IRS, and index-provider sources.

Disclosure: the author holds VTI, VXUS, and AVGV. Fund figures are as of mid-2026 and change over time; check the issuer’s page before acting on any of them. This article is educational and is not financial advice or tax advice; consult a professional about foreign tax credit and asset-location decisions for your situation.