Offer your thoughts or opinion on the input financial query or topic using your financial background.

Optimal Asset Allocation
When you have multiple assets available and a risk-free asset (cash or borrowing) you will always end up blending them if you have a reasonable objective function.  However, you seem to have constrained yourself to 100% investment.  Combine that with the fact that you are considering only two assets and you can easily have a solution where only one asset is desired in the portfolio.  The fact that you describe the US fund as "dominating" the forign fund indicates that this may be the case for you.  Ordinarily diversification benefits the overall portfolio even if one asset "dominates" another but it may not in your special case. Notice that these funds are both already highly diversified, so all you are getting is cross-border diversification by getting more than one.  That may be why you are getting the solution you are.  I've seen a lot of suggested allocations that have weights similar to what you are using. Finding an optimal portfolio given a vector of expected returns and a covariance matrix is very easy, with some reliable results.  Fancy models get pretty much the same kinds of answers as simple ones.  However, getting a good covariance matrix is hard and getting a good expected return vector is all but impossible.  Unfortunately portfolio results are very sensitive to these inputs.  For that reason, most of us use portfolio theory to guide our intuition, but seldom do the math for our own portfolio.  In any model you use, your weak link is the expected return and covariance.  More sophisticated models don't usually help produce a more reasonable result. For that reason, your original strategy (80-20) sounds pretty good to me.  Not sure why you are not diversifying outside of equities, but I suppose you have your reasons.