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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 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

Article Contents

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 unique about Paul Merriman’s portfolios?

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

  • Excellent diversification through slicing and dicing.
  • They display a heavy concentration of a few high performing asset classes like small caps and small-cap value.

Paul Merriman’s portfolios have evolved over the years. They used to have a good amount of bonds in them. The Ultimate portfolio used to have a bond component. 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 beautiful 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 nameAsset class count1 year return (2019)Year to date10 year returnCAGR since 1989DrawdownRisk LevelExpense ratioYield
Paul Merriman's Best-in-Class ETFs Portfolio (Aggressive)1223.53%-0.48%9.40%9.28%-38.36%5 - very high risk0.19%2.88%
Paul Merriman's Best-in-Class ETFs Portfolio (Moderate)1516.44%0.05%6.88%8.18%-19.51%2 - low risk0.13%2.22%
Paul Merriman's Best-in-Class ETFs Portfolio (Conservative)1512.90%0.31%5.53%7.41%-10.09%1 - very low risk0.11%1.88%
Paul Merriman's Target Date Portfolio (25 year old)422.17%-2.45%10.48%10.83%-36.46%5 - very high risk0.26%2.03%
Paul Merriman's Target Date Portfolio (35 year old)1122.49%-2.17%10.50%10.70%-36.35%5 - very high risk0.24%2.09%
Paul Merriman's Target Date Portfolio (45 year old)1421.83%-1.50%10.04%10.24%-33.39%5 - very high risk0.21%2.14%
Paul Merriman's Target Date Portfolio (55 year old)1419.47%-0.57%8.82%9.34%-25.97%3 - medium risk0.15%2.08%
Paul Merriman's Target Date Portfolio (65 year old)1415.04%0.14%6.81%8.11%-14.21%2 - low risk0.10%1.84%
Paul Merriman's FundAdvice Ultimate Buy and Hold1316.61%0.12%6.77%8.13%-21.14%3 - medium risk0.13%2.17%
Paul Merriman 2-Fund-Value-Portfolio224.29%-0.84%12.22%10.66%-36.25%5 - very high risk0.10%2.13%
Paul Merriman 4-Fund-Portfolio426.85%0.53%12.72%10.71%-35.26%5 - very high risk0.08%1.85%
Paul Merriman 5-Fund-Value-Portfolio521.75%-1.79%9.99%9.93%-39.50%5 - very high risk0.28%2.98%
Paul Merriman Ultimate Buy & Hold Strategy 20101218.07%0.41%7.47%8.43%-23.15%3 - medium risk0.17%2.51%

Building the portfolio

Below you can see the asset allocations for the portfolio. You can also see if the portfolio has a socially responsible investing (ESG) variant portfolio. You can read more about socially responsible investing (ESG) investment portfolios in this post.
To build the portfolio yourself, go to our best in class ETF page to see which ETF you should choose for a particular asset class. There you can also see which socially responsible investing ESG ETFs you should select.

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 excellent 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 two below, is 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 somewhat different.

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

How we select the right ETFs

There are a lot of ETFs out there. Most of them can be discarded because:

  • They are too expensive
  • They hold too few assets and are therefore too illiquid
  • They do not meet the criteria for representing the asset class they are supposed to mirror.

We have carefully selected an ETF for each asset class that the portfolios on portfolioeinstein.com use. If you want to read more about our selection process and see what we consider the best ETFs please visit our article What Is The Best ETF?

As of 2020 we also track socially responsible investing ESG portfolios. Socially responsible investing (ESG) portfolios prioritize investing that puts an emphasis on environmental, social and corporate governance issues.

You can find the socially responsible investing ESG ETFs in the same article.

Alternatives to Paul Merriman’s portfolios

There are a few alternatives to Paul Merriman’s portfolios. Remember that his portfolios are very diversified into many asset classes, or they are very concentrated into a 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.

Resources

Paul Merriman’s website with tons of information on his many portfolios.

Paul Merriman’s YouTube channel.

Paul Merriman’s podcast “Sound Investing”.

Suggestions for your next steps

Finding the correct portfolio is hard. Maintaining your portfolio is also daunting. If you are still in doubt about which portfolio to choose, we suggest you read our article How To Invest Money: 5 Simple Steps That Work For Anyone

If you have already committed to a portfolio – good for you! If you need help maintaining the portfolio you will find our rebalance worksheet useful. Rebalancing your portfolio lowers your risk and may even provide higher returns in the long run.

You can find the rebalance worksheet in our article Here Is The Most Easy To Use Portfolio Rebalance Tool

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.

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