The other was the Vanguard Global Credit Bond Fund, an actively managed fund that holds nearly 60% of its holdings in US debt and the rest in international issues. Its expense ratio is 0.35% for the base fund, and it drops to 0.25% if you invest at least $ 50,000 in it.

It’s only been around for three years, but I liked some things about it. First, the majority of his non-US holdings are hedged, so my friend wouldn’t have to worry about currency risk. Second, according to Vanguard’s website, the fund only holds 26% of its portfolio in bonds with terms of 10 years or more, which reduces some of the risk of rising interest rates, which harms more. seriously to bonds with longer durations than short-term instruments. .

It was arbitrary decisions to focus on just two funds and on those two in particular. I could have given him just one, a global balanced fund, for example. This is the term for a mutual fund that invests in both stocks and bonds from around the world.

But if you go this route, you don’t know exactly how the fund manager thinks your money should be invested. I wanted to give my friend more control.

One potential objection to my stock recommendation is that the Fidelity fund only holds US stocks. Many experts say that a diversified portfolio should include stocks from all over the world, but I’m not so sure. After all, America’s largest corporations derive a significant portion of their revenue from overseas. About 30% of sales recorded by members of the S&P 500 come from outside the United States, for example.

I thought that would cover international diversification. Is this a perfect solution? No. But I was trying hard to get a solid and relatively straightforward recommendation. In fact, it was an argument that John C. Bogle, the founder of Vanguard, endorsed. If you invest in the S&P 500, he argued, you are investing in the world.

I could have recommended a global mutual fund, but I couldn’t find one that I felt completely comfortable with. For example, while I liked the T. Rowe Price Global Stock Fund, it only has 55% US stocks, and that was not enough for me.