What are the cons of the 3 fund portfolio? (Global diversified Equity ETF IWDA/VWRA, Local Equity ETF ES3/G3B, Local Bond ETF A35/MBH)?

(my personal opinion and thoughts)
I don’t think the bogleheads 3 funds portfolio is the best for Singapore context.

The 3 fund portfolio originated from US, by right the local equity portion will likely be S&P500 ETF. S&P500 had performed extremely well for the past few decades. On the other hand, the local equity portion will be STI ETF for a Singapore investor. STI ETF only contains 30 companies and have a huge weightage in Finance sector. The past performance isn’t as good as S&P500 too.

The 3 funds portfolio for a Singapore investor will likely perform worse than a US investor’s 3 fund portfolio ( according to the past performance), therefore the 3 funds portfolio is likely better for US investors.( but past performance is not future performance)

If robo advisor only invest in 1 or 2 diversified ETF, who will actually invest in them? Since anyone can just invest straight into an ETF, it’s not worth paying the robo management fees already. The reason why robo advisor invest in many different sectors or geographical ETF is because they can strategies and choose which sector or countries individually. They will invest in sectors/ countries which they think have the highest potential and also make the necessary adjustment from time to time. That’s the value added service they provided imo. Also, robo advisor might use smart beta strategy, this strategy cannot be implemented using globally diversified ETF like IWDA.

The cons? It’s extremely boring, you basically buy the same few ETFs till you retire, and get steady market returns. Of course you don’t get your potential multi baggers from individual stock picking but I wouldn’t bet my chances on that as a retail investor anyway.

Our STI has been underperforming for the past few years, but no one seems to remember the period from the early 2000s when the STI absolutely crushed the S&P 500 during that decade. I find it ironic that people want to get in the US market after it has had the biggest bull run in its history. The best time to buy the stocks are before they go up, not after.

Admittedly, the STI isn’t well diversified, nor is it an attractive exchange for potential great companies to list in. However, the purpose of a local ETF is to minimise currency exchange risk as presumably you plan to retire in Singapore. My view is that having a small portion of your portfolio in local stocks, gradually increasing as you approach retirement, doesn’t hurt.

Funds/robos obviously do have to offer something innovative to justify their fees or everyone will start realising they can just cut out the middle man and DIY. However, betting on specific sectors or even countries is going to be far riskier. (Japan, anyone?) you also get exposed to specific currency risks, political tensions, trade wars etc.

I suspect the reason a 3 fund portfolio isn’t recommended is because most people have the wrong impression of investing, when they hear investing they probably think Wall Street brokers in fancy suits looking at complicated charts. Additionally, because it is that simple, you cut out any middle man fees. I highly doubt anyone who is being paid to manage your portfolio would actively recommend this approach to you.