Paul Merriman Portfolios: Unbiased Outperformance

Paul Merriman has constructed a lot of portfolios. This page details his many fantastic portfolios. Many of them outperform the S&P 500.

This is the article detailing the investment portfolios of Paul Merriman. You will find asset allocation and performance measurements here.

Paul Merriman has constructed a lot of portfolios. This page details his many fantastic portfolios. Many of them outperform the S&P 500. Here you will find asset allocation and performance measures of Paul Merriman’s portfolios.

Paul Merriman Portfolios: Unbiased Outperformance

Who is Paul Merriman?

Paul Merriman, educator, entrepreneur and an all-around good guy in investing have a host of portfolios. They all express massive diversification and a slight to an extreme bias towards value and small-cap, especially small-cap value which historically has been the best performing asset, class. Paul Merriman’s podcast is highly recommended, as are the many articles on his site. His personal finance book Get Smart or Get Screwed: How To Select The Best and Get The Most From Your Financial Advisor easily wins as the best-titled book on personal finance. His book Financial Fitness Forever: 5 Steps to More Money, Less Risk, and More Peace of Mind is fantastic and stuffed with sage advice, statics, and evidence-based best-investing practices.

For a detailed rundown of Paul Merriman’s Ultimate portfolio, you should read the article Paul Merriman’s Ultimate Portfolio: 10 X 10 = Winner?

Paul Merriman’s work on the best ETFs inspired me to expand upon his work to create a best-in-class ETF and Mutuals fund overview for many more asset classes.

What is special about Paul Merriman’s portfolios?

Paul Merriman’s portfolios are characterized by one of two features:

  1. Really good diversification through slicing and dicing.
  2. A heavy concentration of a few high performing asset classes like small caps and/or small-cap value.

Paul Merriman’s portfolios have evolved over the years. They used to have a good amount of bonds in them like the Ultimate portfolio. The ultimate portfolio no longer sports bonds. Paul Merriman is a big fan of small caps and value on which he has done extensive research.

Paul Merriman is an evidence-based investor and favors statistics over feelings.

His ultimate portfolio is a wonderful example of how diversification can bring higher returns without higher risk.

Paul Merriman is retired (he used to run his own investment consulting shop). The work he is doing now is strictly non-profit. All of his podcasts, articles and many other greats resources are without any profit motive. This makes him highly unbiased and trustworthy as he is not pushing any hidden agenda other than trying to help everyday investors. I am a big fan of Paul Merriman and the great work he is doing.

Paul Merriman is an evidence-based investor and favors statistics over feelings.

Performance of Paul Merriman’s portfolios

Portfolio NameNumber of asset classes1 year return 2019YTD (incl. December 2019)10 year returnDrawdownRisk LevelMarket CorrelationDollar Value
S&P 500 (Benchmark)131.25%31.25%12.97%-37.71%5 - very high risk0.99$167,045.76
Merrimans Ultimate Portfolio1023.49%23.49%10.33%-41.53%5 - very high risk0.83$123,701.16
Paul Merriman Best-in-Class ETFs Portfolio (Aggressive)1223.24%23.24%10.54%-38.78%5 - very high risk0.85$131,206.74
Paul Merriman Best-in-Class ETFs Portfolio (Moderate)1515.99%15.99%7.48%-20.03%2 - low risk0.85$101,511.15
Paul Merriman Best-in-Class ETFs Portfolio (Conservative)1512.37%12.37%5.82%-10.65%1 - very low risk0.79$83,794.82
Paul Merriman Target Date Portfolio (25 year old)423.37%23.37%11.77%-37.29%5 - very high risk0.78$208,879.80
Paul Merriman Target Date Portfolio (35 year old)1123.32%23.32%11.73%-37.11%5 - very high risk0.79$199,704.11
Paul Merriman Target Date Portfolio (45 year old)1421.98%21.98%11.09%-34.01%5 - very high risk0.82$174,635.70
Paul Merriman Target Date Portfolio (55 year old)1418.82%18.82%9.54%-26.44%3 - medium risk0.85$136,442.55
Paul Merriman Target Date Portfolio (65 year old)1414.10%14.10%7.13%-14.68%2 - low risk0.84$99,510.95
Paul Merriman 2-Fund-Value-Portfolio225.05%25.05%12.16%-36.32%5 - very high risk0.87$181,628.39
Paul Merriman 4-Fund-Portfolio426.01%26.01%12.71%-35.35%5 - very high risk0.94$180,685.17
Paul Merriman 5-Fund-Value-Portfolio522.10%22.10%10.15%-40.36%5 - very high risk0.82$148,767.07

Asset Allocation of Paul Merriman’s Portfolios

Paul Merriman’s Best-in-Class ETFs Portfolio (Aggressive)                           

  • 11.30%  US Large Cap Value         (VTV)
  • 11.20%  US Large Cap      (VV)
  • 11.30%  US Small Cap Value         (VIOV)
  • 11.20%  US Small Cap      (VIOO)
  • 5.00%    REITs     (VNQ)
  • 9.00%    International Developed Blend      (VEA)
  • 4.50%    Emerging Markets           (VWO)
  • 9.00%    International Large Cap Value     (EFV)
  • 9.00%    International Small Cap Blend             (VSS)
  • 9.00%    International Small Cap Value             (DLS)
  • 4.50%    Emerging Markets Small Cap       (EWX)
  • 5.00%    International REITs          (VNQI)

This and the two portfolios below are part of his “best-in-class” portfolios. You can find them here.

Paul Merriman’s Best-in-Class ETFs Portfolio (Conservative)                      

  • 4.50%    US Large Cap Value         (VTV)
  • 4.50%    US Large Cap      (VV)
  • 4.50%    US Small Cap Value         (VIOV)
  • 4.50%    US Small Cap      (VIOO)
  • 2.00%    REITs     (VNQ)
  • 3.60%    International Developed Blend      (VEA)
  • 1.80%    Emerging Markets           (VWO)
  • 3.60%    International Large Cap Value     (EFV)
  • 3.60%    International Small Cap Blend             (VSS)
  • 30.00%  Intermediate-Term Treasuries       (VGIT)
  • 18.00%  Short Term Treasuries       (VGSH)
  • 12.00%  TIPS       (VTIP)
  • 3.60%    International Small Cap Value             (DLS)
  • 1.80%    Emerging Markets Small Cap       (EWX)
  • 2.00%    International REITs          (VNQI)

Paul Merriman’s Best-in-Class ETFs Portfolio (Moderate)                            

  • 6.80%    US Large Cap Value         (VTV)
  • 6.70%    US Large Cap      (VV)
  • 6.80%    US Small Cap Value         (VIOV)
  • 6.70%    US Small Cap      (VIOO)
  • 3.00%    REITs     (VNQ)
  • 5.40%    International Developed Blend      (VEA)
  • 2.70%    Emerging Markets           (VWO)
  • 5.40%    International Large Cap Value     (EFV)
  • 5.40%    International Small Cap Blend             (VSS)
  • 20.00%  Intermediate-Term Treasuries       (VGIT)
  • 12.00%  Short Term Treasuries       (VGSH)
  • 8.00%    TIPS       (VTIP)
  • 5.40%    International Small Cap Value             (DLS)
  • 2.70%    Emerging Markets Small Cap       (EWX)
  • 3.00%    International REITs          (VNQI)

Paul Merriman’s FundAdvice Ultimate Buy and Hold                     

  • 6.00%    US Large Cap Value         (VTV)
  • 6.00%    US Large Cap      (VV)
  • 6.00%    US Small Cap Value         (VIOV)
  • 6.00%    US Small Cap      (VIOO)
  • 6.00%    REITs     (VNQ)
  • 6.00%    Emerging Markets           (VWO)
  • 6.00%    International All-World ex-US     (VEU)
  • 6.00%    International Large Cap Value     (EFV)
  • 6.00%    International Small Cap Blend             (VSS)
  • 20.00%  Intermediate-Term Treasuries       (VGIT)
  • 12.00%  Short Term Treasuries       (VGSH)
  • 8.00%    TIPS       (VTIP)
  • 6.00%    International Small Cap Value             (DLS)

Paul Merriman’s Target Date Portfolio (25-year-old)                     

  • 70.00%  US Small Cap Value         (VIOV)
  • 5.00%    Emerging Markets           (VWO)
  • 20.00%  International Small Cap Value             (DLS)
  • 5.00%    Emerging Markets Small Cap       (EWX)

Together with Chris Pedersen, Paul Merriman has constructed what he calls the ultimate target-date fund. These are characterized by tilting heavily into small-cap value, historically the best performing asset class.

This is an example of a Paul Merriman portfolio with a heavy concentration of few asset classes.

Paul Merriman’s Target Date Portfolio (35-year-old)                     

  • 2.35%    US Large Cap Value         (VTV)
  • 61.86%  US Small Cap Value         (VIOV)
  • 4.73%    US Small Cap      (VIOO)
  • 1.05%    REITs     (VNQ)
  • 4.66%    Emerging Markets           (VWO)
  • 0.81%    International All-World ex-US     (VEU)
  • 0.81%    International Large Cap Value     (EFV)
  • 0.81%    International Small Cap Blend             (VSS)
  • 17.81%  International Small Cap Value             (DLS)
  • 4.66%    Emerging Markets Small Cap       (EWX)
  • 0.45%    International REITs          (VNQI)

Paul Merriman’s Target Date Portfolio (45-year-old)                     

  • 5.98%    US Large Cap Value         (VTV)
  • 44.49%  US Small Cap Value         (VIOV)
  • 11.97%  US Small Cap      (VIOO)
  • 2.66%    REITs     (VNQ)
  • 3.78%    Emerging Markets           (VWO)
  • 2.05%    International All-World ex-US     (VEU)
  • 2.05%    International Large Cap Value     (EFV)
  • 2.05%    International Small Cap Blend             (VSS)
  • 3.50%    Intermediate-Term Treasuries       (VGIT)
  • 2.10%    Short Term Treasuries       (VGSH)
  • 1.40%    TIPS       (VTIP)
  • 13.05%  International Small Cap Value             (DLS)
  • 3.78%    Emerging Markets Small Cap       (EWX)
  • 1.14%    International REITs          (VNQI)

Paul Merriman’s Target Date Portfolio (55-year-old)                     

  • 9.13%    US Large Cap Value         (VTV)
  • 21.74%  US Small Cap Value         (VIOV)
  • 18.27%  US Small Cap      (VIOO)
  • 4.06%    REITs     (VNQ)
  • 2.47%    Emerging Markets           (VWO)
  • 3.13%    International All-World ex-US     (VEU)
  • 3.13%    International Large Cap Value     (EFV)
  • 3.13%    International Small Cap Blend             (VSS)
  • 12.00%  Intermediate-Term Treasuries       (VGIT)
  • 7.20%    Short Term Treasuries       (VGSH)
  • 4.80%    TIPS       (VTIP)
  • 6.73%    International Small Cap Value             (DLS)
  • 2.47%    Emerging Markets Small Cap       (EWX)
  • 1.74%    International REITs          (VNQI)

Paul Merriman’s Target Date Portfolio (65-year-old)                     

  • 7.87%    US Large Cap Value         (VTV)
  • 7.88%    US Small Cap Value         (VIOV)
  • 15.75%  US Small Cap      (VIOO)
  • 3.50%    REITs     (VNQ)
  • 1.35%    Emerging Markets           (VWO)
  • 2.70%    International All-World ex-US     (VEU)
  • 2.70%    International Large Cap Value     (EFV)
  • 2.70%    International Small Cap Blend             (VSS)
  • 25.00%  Intermediate-Term Treasuries       (VGIT)
  • 15.00%  Short Term Treasuries       (VGSH)
  • 10.00%  TIPS       (VTIP)
  • 2.70%    International Small Cap Value             (DLS)
  • 1.35%    Emerging Markets Small Cap       (EWX)
  • 1.50%    International REITs          (VNQI)

Paul Merriman’s Ultimate Portfolio                       

  • 10.00%  US Large Cap Value         (VTV)
  • 10.00%  US Large Cap      (VV)
  • 10.00%  US Small Cap Value         (VIOV)
  • 10.00%  US Small Cap      (VIOO)
  • 10.00%  REITs     (VNQ)
  • 10.00%  Emerging Markets           (VWO)
  • 10.00%  International All-World ex-US     (VEU)
  • 10.00%  International Large Cap Value     (EFV)
  • 10.00%  International Small Cap Blend             (VSS)
  • 10.00%  International Small Cap Value             (DLS)

This is the portfolio that Paul Merriman features on MarketWatch. It shows the power of diversification that brings home very good returns while keeping risk in check.

Paul Merriman 2-Fund-Value-Portfolio

  • 50.00%  US Large Cap Value         (VTV)
  • 50.00%  US Small Cap Value         (VIOV)

This portfolio along with the 2 below are further examples of how a Paul Merriman portfolio is heavily tilted towards value and small-cap.

Paul Merriman 4-Fund-Portfolio             

  • 25.00%  US Large Cap Value         (VTV)
  • 25.00%  US Large Cap      (VV)
  • 25.00%  US Small Cap Value         (VIOV)
  • 25.00%  US Small Cap      (VIOO)

Paul Merriman 5-Fund-Value-Portfolio

  • 25.00%  US Large Cap Value         (VTV)
  • 25.00%  US Small Cap Value         (VIOV)
  • 20.00%  International Lg Cap Value           (EFV)
  • 20.00%  Intl Sm Cap Value             (DLS)
  • 10.00%  Emerging Markets Value               (FNDE)

Paul Merriman Ultimate Buy & Hold Strategy 2010                         

  • 6.00%    US Large Cap Value         (VTV)
  • 6.00%    US Large Cap      (VV)
  • 6.00%    US Small Cap Value         (VIOV)
  • 6.00%    US Micro-Cap     (IWC)
  • 6.00%    REITs (Real Estate)           (VNQ)
  • 6.00%    Int. Developed Blend      (VEA)
  • 6.00%    Emerging Markets           (VWO)
  • 6.00%    International Lg Cap Value           (EFV)
  • 6.00%    Intl Sm Cap Blend             (VSS)
  • 20.00%  Intermediate-Term Treasury       (VGIT)
  • 20.00%  Corporate Bonds              (LQD)
  • 6.00%    Intl Sm Cap Value             (DLS)

This is a slightly different variant of the Ultimate portfolio. This one is from 2010. The bond portion of the portfolio is slightly different.

Together with Chris Pedersen, Paul Merriman has constructed what he calls the ultimate target-date fund

Alternatives to Paul Merriman’s portfolios

There are a few alternatives to Paul Merriman’s portfolios. Remember that his portfolios are either very diversified into many asset classes or they are very concentrated into few of the best historically performing asset classes. Therefore, if you want similar diversification then have a look at the IFA portfolios or some of David Booth’s portfolios. For concentrated portfolios, the best alternatives are from the FPL Capital Management Portfolios.

If you are looking for target-date funds be sure to check out our growing Target Date Fund Portfolio overview.

Conclusion

Which portfolio do you use? Why do you think the balanced portfolio too simple for you?

After having read up on Paul Merriman’s portfolios I encourage you to find other great portfolios right here on portfolioeinstein.com.

If you have suggestions for new portfolios be sure to add them in comments or reach out to me.

I would love hearing from you!

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