The Ultimate portfolio used to have a bond component. QYLD Avoid This ETF as a Long-Term Investment (A Review), The 5 Best T Bill ETFs (Treasury Bills) To Park Cash in 2023, JEPI ETF Review JPMorgan Equity Premium Income ETF, SPAXX vs. FZFXX, FDIC, FCASH, FDRXX Fidelity Core Position. He stresses that this may not be the right portfolio for you, but many take it as a starting point for a well-balanced portfolio. They have experienced long periods of underperformance, however. My own personal portfolio tilts toward both of these factors. The research is sound and the concept is simple. The Paul Merriman 4 Fund Portfolio is a simple, equal-weighted equities portfolio that tilts toward small caps and Value stocks. No single country consistently outperforms all the others in the world. Expense ratio: This shows the cost of holding the portfolio if you were to construct the portfolio using the proposed ETFs. Golden Butterfly Portfolio Each asset class has a role to play: the long-term bonds will perform well during deflation; stocks will do well during times of economic growth; Treasury Bills will hold up during recessions and gold is helpful during times of inflation. Until recently, costs of international bond fund products were prohibitive for retail investors, and international assets of all kinds were viewed with skepticism until about the 1990's. The 60/40 portfolio delivered steady returns for nearly a decade - then cratered in 2022. 9.00% International Developed Blend (VEA), 9.00% International Large Cap Value (EFV), 9.00% International Small Cap Blend (VSS), 9.00% International Small Cap Value (DLS), 3.60% International Developed Blend (VEA), 3.60% International Large Cap Value (EFV), 3.60% International Small Cap Blend (VSS), 30.00% Intermediate-Term Treasuries (VGIT), 3.60% International Small Cap Value (DLS), 5.40% International Developed Blend (VEA), 5.40% International Large Cap Value (EFV), 5.40% International Small Cap Blend (VSS), 20.00% Intermediate-Term Treasuries (VGIT), 5.40% International Small Cap Value (DLS), 6.00% International All-World ex-US (VEU), 6.00% International Large Cap Value (EFV), 6.00% International Small Cap Blend (VSS), 6.00% International Small Cap Value (DLS), 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), 6.73% International Small Cap Value (DLS), 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), 2.70% International Small Cap Value (DLS), 6.00% International Developed Blend (VEA). VOO vs. VOOV vs. VOOG Vanguard S&P 500, Value, or Growth? Where can I learn more about Paul Merriman? Lets look at the strategy and its historical and current performance: Paul Merriman is a financial advisor and founder of Merriman Financial Education foundation, a non-profit organization providing free resources and educational material to help people achieve financial goals. 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. Today we look at a seasonal trading strategy in crude oil. Past performance does not guarantee future results. Finding the right portfolio is hard. Each holding is equally weighted. In this article well look at three of the most popular ones. We also use third-party cookies that help us analyze and understand how you use this website. Link to his website article: https://paulmerriman.com/market-got-you-down-how-to-construct-a-comeback-portfolio/ Nonetheless, historically this simple to implement portfolio has delivered strong performance over decades, for those can endure the potential periods of major decline such as 2008-2009. If you need help maintaining the portfolio you will find our rebalance worksheet useful. As Proposed by Bill Schultheis, author and investment adviser. What Returns Can We Expect After A Very Bad Friday In The Stock Market? Efficient Core ETF (90/60), The Ginger Ale Portfolio (My Own Portfolio) and M1 ETF Pie. Just as in the 3 Fund Portfolio, here I've set both international stocks and international bonds at 1/3 the allocations of their domestic counterparts. Paul Merriman is a successful investor, who know focuses his time on educating people on how to invest through his foundation. Using entirely low-cost Vanguard funds, we can construct an 80/20 allocation of the Bogleheads 4 Fund Portfolio pie like this: VTI - 60% VXUS - 20% BND - 15% BNDX - 5% You can add the this pie to your portfolio on M1 Finance by clicking this link and then clicking "Save to my account." As the name suggests, it consists of just three asset classes: How much an investor allocates to each asset class will depend on their risk tolerance and investing time horizon. Which portfolio is best - Ray Dalio's All-Weather portfolio or the Permanent portfolio? Ivy League Portfolio How $10,000 will help my newborn granddaughter have a better retirement, Help your teenager turn $500 into nearly $2 million, How to buy 10 years of retirement for $3,650, The Merriman Financial Education Foundation, Vanguard Tax-Managed Small-Cap Admiral Shares *, Vanguard Small-Cap Value Index Admiral Share, Vanguard Developed Markets Index Admiral Shares, Vanguard FTSE All-World ex-US Small Cap Index Admiral, Vanguard Emerging Mkts Stock Index Admiral Shares, Vanguard Global Ex-US Real Estate Index Admiral Shares, Short-Term Government Bond Index Admiral Shares, Intermediate-Term Government Bond Index Admiral Shares, Short-Term Inflation-Protected Securities Index Admiral Shares, * The Tax-managed Small-Cap Admiral Shares (VTMSX. The portfolio consist of the following assets: For our backtest (see more below), we chose the following ETFs: There is a reason why Paul Merriman suggested the exact portfolio composition as he did. Search the website Podcast Fixed distributions 2023 MarketWatch Article -coming soon Tables Table D1.3 Fixed Distributions: S&P Equity Portfolio-initial distribution $30,000 Table D1.4 Fixed Distributions: The same but initial distribution $40,000 Table D1.5 Fixed Distributions: The same but initial distribution $50,000 Table D1.6 Fixed Distributions: The same but initial distribution $60,000 . This is a paid product that gives you the 20 best-performing portfolios since 1989. You can find the rebalance worksheet in our article Here Is The Most Easy To Use Portfolio Rebalance Tool. The Coffeehouse Portfolio Using Merriman's best-in-class ETFs, we can construct the Paul Merriman 4 Fund Portfolio like this: You can add the Paul Merriman 4 Fund Portfolio pie to your portfolio on M1 Finance by clickingthis linkand then clicking Save to my account.. When it does, Paul Merrimans portfolio could easily outperform the Warren Buffett portfolio over a period of time. I would strongly encourage you to go read the post on the 3 Fund Portfolio first and then come back here where I'm simply discussing the addition of the international bonds component. Brownes portfolio is designed to hold up well in any economic environment and be a simple portfolio to implement. Check out my flat-fee-only fiduciary friends over at Advisor.com. Paul Merrimans podcast is highly recommended, as are the many articles on his site. Paul Merriman is a big fan of small caps and value on which he has done extensive research. Historically, small caps have offered higher returns than large caps, and value stocks have proved to return slightly better than growth stocks. You stand to gain thousands more dollars EACH YEAR for the price of a few months of Netflix. You can also subscribe without commenting. If you're looking for income then you should look at this list of the 20 best income portfolios. And is there one youd personally prefer? Basically, the portfolio places large bets on the well-established Size and Value factor premia, tilting heavily to small cap stocks and Value stocks, to hopefully deliver market outperformance over the long term. Deductions are permissible to the extent of the law. In this article, I provide hard facts about how my second-guessing, Read More The Cost of Second Guessing Trading Strategies (Why You Need A Written Trading Plan and Log)Continue, Last Updated on April 18, 2023 High Probability ETF Trading, published in 2009 and written by Larry Connors and Cesar Alvarez, contains some interesting strategies. In your above review of the Merriman 4 Fund Portfolio you note that it is 100 percent domestic equity in its construction. Following some of your thoughts regarding the superiority of government bonds to corporate youve written about elsewhere, and a preference for long term at that what would you think of replacing BND with GOVT, or EDV, or SPIP, or LTPZ? As the name implies, the portfolio comprises four funds (ETFs). It was designed by Paul Merriman, a well-known financial educator and advisor, as a low-cost, diversified portfolio that individual investors can easily implement. One way to do that is with a simple four-fund U.S. portfolio made up of equal parts of the S&P 500, large-cap value stocks, small-cap blend stocks, and small-cap value stocks. The portfolio has returned 12.4% annually compared to 10.7% for the S&P 500. Going back to 1928, the S&P 500 index (U.S. large cap blend) has had a compound annualized return of 10.2% through 2022. I'm not a big fan of social media, but you can find me on LinkedIn and Reddit. Required fields are marked *. I'm just starting out and thus far have just been dumping my money into VTSAX and VIGAX. All portfolios are slightly different in the precise allocations, but most follow these patterns. Thanks! The volatility and risk reduction benefits are another conversation entirely, which is of huge significance for a retiree. Im curious as to why you use allocations that are so different than those for the 80/20 on the the Bogleheads site. In other reviews you have published I have seen where you make adjustments to the creators portfolios which you contend might increase reward and possibly reduce risk; doing both at the same time. This is the magic of compounding. However, Merriman is most famous for his work on low-cost, passive investing strategies, such as the Ultimate Buy and Hold Portfolio and the Four Fund Portfolio, which we cover in this article. TQQQ Is It A Good Investment for a Long Term Hold Strategy? You mention the need the general theory of the need for more international exposure, but this version of the 4 fund portfolio has less. The blue circle shows the return of the 4-fund combo . David Swenson Yale Portfolio UpMyInterest 2019-2021 High Tech Portfolio * Indicates there are admiral GNMA (VFIJX) and High Yield (VWEAX) shares with minimum of $50,000. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Since it is effectively a 90/60 in a single fund, it seems to me that I could match the contribution of BND with NTSX at 25%, then decrease VTI to make it fit. Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It has smoked the S&P 500 historically, which again we would expect over the long term, even on a risk-adjusted basis despite its greater volatility. The portfolio is 100% stocks and is thus considered more risky than his Ultimate Buy and Hold Portfolio. UpMyInterest 2018-2020 Medium Risk Portfolio The performance data covers January 2010 to May 2021, an important limitation well return to in a minute. What lessons can we learn by looking across these portfolios? The portfolios represent a great opportunity for you to get more money from your investment portfolios. We have hundreds of investment ideas in the compilation. I delved into those ideas here and here. We'll assume you're ok with this, but you can opt-out if you wish. The consent submitted will only be used for data processing originating from this website. You can find them here. For them, we created the U.S. Four-Fund combo. Vanguard Financial Advisor Services | Vanguard Advisors. Some of the things that university endowments do are hard to replicate simply for the individual investor, such as owning private equity or investing in absolute return strategies, but when translated into accessible ETF-based asset classes, the average of Harvard, Stanford and Yales allocations look like the below. Overall, Paul Merriman is a well-respected figure in the world of finance and investing, known for his advocacy of low-cost, evidence-based investment strategies and his dedication to educating and empowering individual investors. Here well investigate its components, historical performance, and the best ETFs to use in its implementation. 10% . Save my name, email, and website in this browser for the next time I comment. I'm not a big fan of social media, but you can find me on LinkedIn and Reddit. Paul Merriman is retired (he used to run his own investment consulting shop). It consists of just two asset classes: an S&P 500 index fund and a short-term U.S. government bond fund. The key is that any of the above Lazy Portfolios should be a core part of a long-term, buy and hold investing strategy. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. Merriman founded his own investment advisory firm, Merriman Wealth Management, in 1983, where he worked with clients to develop customized investment strategies based on their individual goals and risk tolerances. This makes him highly unbiased and trustworthy as he is not pushing any hidden agenda other than trying to help everyday investors. Heres a snapshot of each portfolios performance: Keep in mind that the last decade has seen large growth companies outperform other parts of the market. (Photo by EyesWideOpen/Getty Images), Vanguard Total Stock Market Index Fund (VTSAX), Vanguard Total International Stock Index Fund (VTIAX), Fidelity Total International Index Fund (FTIHX). Hello! Firstly own both stocks and bonds, secondly consider real assets like commodities and/or real estate, and finally some international diversification may be helpful. In this regard, merely investing in the S&P in the long run will always give superior results. But opting out of some of these cookies may affect your browsing experience. This website uses cookies to improve your experience. Based on that, a one-size-fits-most 80/20 allocation for the Bogleheads 4 Fund Portfolio is: My data for the total international bond market only goes back to 1999, so the backtest below is for the period 1999 through 2021, comparing an 80/20 Bogleheads 4 Fund Portfolio to the S&P 500 index.Source: PortfolioVisualizer.com, Given the short time period, CAGR's are pretty close, with the 4 Fund Portfolio having a higher risk-adjusted return from lower volatility and smaller drawdowns:Source: PortfolioVisualizer.com. Can you share an idea based on your analysis about what foreign equity EFT(s), and what allocation, might compliment the Merriman 4 Fund Portfolio? Paul Merrimans podcast Sound Investing. Rebalancing your portfolio lowers your risk and may provide higher returns in the long run. Therefore, the information here presented are not specific recommendations but instead for information purposes only. Today, Merriman is retired, but he continues to write and speak on financial topics, and his work has had a lasting impact on the investment industry and individual investors alike. See the full list here. I have first-hand experience with every product or service I recommend, and I recommend them because I genuinely believe they are useful, not because of the commission I get if you decide to purchase through my links. In this era of social investing/trading, Twitter, Read More The Twitter Trading StrategyContinue, Last Updated on April 18, 2023 During my twenty years of trading, I have learned that the best recipe for success is to follow and execute my trading plan. The main idea behind the holdings is to capture risk premiums based on long-term evidence. In other words, if you can handle the volatility, Merriman's portfolio may be a sound option. Canadians can find the above ETFs on Questrade or Interactive Brokers. What is unique about Paul Merrimans portfolios? Paul Merrimans Ultimate Portfolio: 10 X 10 = Winner? One of Merrimans key contributions to the world of investing is his development of a number of low-cost, passive investment portfolios designed to provide investors with broad diversification and low fees. Both strategies are designed to help individual investors achieve their financial goals with minimal cost and effort. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. Below you can see the returns of Paul Merrimans portfolios. Impossible to know the future. But all fundamentally recognize the value of having some bonds in your portfolio. Fidelity ZERO Funds Review Whats the Catch? It consists of: 25% SP 500 fund (VFIAX) 25% Large-cap value (VVIAX) 25% Small-cap blend (VTMSX) 25% Small-cap value (VSIAX) I appreciate any feedback as we evaluate this portfolio. Called Lazy Portfolios, these investment strategies work if you have $100 or $100 million to invest. He outlined this plan on page 20 of his 2013 letter to Berkshire Hathaway Shareholders. When it does, Paul Merriman's portfolio could easily outperform the Warren Buffett portfolio over a period of time. Do your own due diligence. Here well take a look at its components, performance, and the best ETFs to use in its implementation. All donations are used to support our work. QYLD Avoid This ETF as a Long-Term Investment (A Review), The 5 Best T Bill ETFs (Treasury Bills) To Park Cash in 2023, JEPI ETF Review JPMorgan Equity Premium Income ETF, SPAXX vs. FZFXX, FDIC, FCASH, FDRXX Fidelity Core Position.