Disclaimer: While I love diving into investing-related data and playing around with backtests, this is not financial advice, investing advice, or tax advice. Paul Merriman is retired (he used to run his own investment consulting shop). The Paul Merriman 4 Fund Portfolio, as the name suggests, is a lazy portfolio designed by Paul Merriman that utilizes equal weightings of 4 assets. Vanguard Tax-Managed Small-Cap Admiral Shares, Vanguard FTSE All-World ex-US Small Cap Index, First three to six months worth of living expenses, Vanguard Short-Term Corp Bond Index Admiral, Funds in excess of three to six months of living expenses, Vanguard Intermediate-Term Corp Bond Index Admiral. How To Trade And Invest In Oil Stocks (Trading Strategy And Seasonality), The Cost of Second Guessing Trading Strategies (Why You Need A Written Trading Plan and Log), Larry Connors RSI 25 & RSI 75 (It Still Works) | Trading Strategies, How To Find and Generate Trading Ideas (What Are Trading Ideas?). Don't want to do all this investing stuff yourself or feel overwhelmed? It's exposed for 100% on the Stock Market. Paul Merriman has constructed a lot of portfolios. Thats certain to change. Fixed Distributions 2023 - Paul Merriman UpMyInterest 2019-2021 High Tech Portfolio You also have the option to opt-out of these cookies. Bogleheads 4 Fund Portfolio Historical Performance, Bogleheads 4 Fund Portfolio ETF Pie for M1 Finance, Check out my flat-fee-only fiduciary friends over at Advisor.com, Improving M1 Finances Moderate Portfolio Expert Pie, M1 Finance vs. Stash Brokerage Comparison [2023 Review], QQQ vs. QQQM NASDAQ 100 Index ETFs from Invesco. How It Works & How to Invest in It, How To Invest in an Index Fund The Best Index Funds, Portfolio Diversification How To Diversify Your Portfolio, Dollar Cost Averaging vs. Ive often been annoyed with the the top heavy exposure in total market funds, but dont want to move to a 8+ fund portfolio either. For more information, please see our Watch it here:Watch this video on YouTube. The 8 Best Small Cap ETFs (4 From Vanguard), The 5 Best EV ETFs Electric Vehicles ETFs, VIG vs. VYM Comparing Vanguards 2 Popular Dividend ETFs, The Best Vanguard Dividend Funds 4 Popular ETFs, The 5 Best Emerging Markets ETFs (1 From Vanguard) for 2023. Mutual Funds: Investing In a Mutual Fund | Vanguard Investment products discussed (ETFs, mutual funds, etc.) Im curious as to why you use allocations that are so different than those for the 80/20 on the the Bogleheads site. Prefer video? The cost of second-guessing my written trading strategies shows why you need a trading plan. It is mandatory to procure user consent prior to running these cookies on your website. The Paul Merriman 4 Fund Portfolio looks like this: 25% S&P 50025% Large Cap Value25% Small Cap Blend25% Small Cap Value. TQQQ Is It A Good Investment for a Long Term Hold Strategy? This is a paid product that gives you the 20 best-performing portfolios since 1989. The six years of losses in the S&P 500 added up to 87.6%; in the four-fund combination, the total was 90.3%. How often should we adjust bonds to match our age -20? These are high-returning portfolios designed to last a lifetime. The ultimate portfolio no longer sports bonds. Disclosure:I am long VOO and AVUV in my own portfolio. Specifically, they showed that for a 60/40 portfolio during the period 1985-2013, diversifying internationally with fixed income resulted in a reduction of volatility as measured by standard deviation from 9.5 to 9.4, a reduction of 1%. Stock market making you nervous? How to control your investing losses Merriman has provided the facts on his website: US small cap (US SCB) and US small cap value stocks (US SCV) have outperformed S&P 500 massively! This site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. This page details his many portfolios. Meb Faber found that if you look at the past 70 years, the U.S. stock market has outperformed foreign stocks by 1% per year, but all of that outperformance has come after 2009. The following table shows 53-year results of doing that. By holding all four together you can, in theory, deal with anything that the economy throws at you and still have at least one part of your portfolio do relatively well. Finally, the Warren Buffett Portfolio embodies Steve Jobs philosophy that simplicity is the ultimate sophistication. Vanguard didn't begin including international bonds in their target date funds until 2013. This makes him highly unbiased and trustworthy as he is not pushing any hidden agenda other than trying to help everyday investors. The evidence seems to show that international bonds may offer a small diversification benefit in terms of credit risk on the fixed income side due to their low correlation with both U.S. stocks and U.S. bonds, but theres no compelling reason to think it's any significant benefit. The current year is excluded from calculations. How I Made A Bollinger Band Strategy Using ChatGPT (Backtest), Financial Fitness Forever: 5 Steps to More Money, Less Risk, and More Peace of Mind, Get Smart or Get Screwed: How To Select The Best and Get The Most From Your Financial Advisor. After logging in you can close it and return to this page. Expense ratio: This shows the cost of holding the portfolio if you were to construct the portfolio using the proposed ETFs. document.getElementById("ak_js_1").setAttribute("value",(new Date()).getTime()); Sign up to receive email updates when a new post is published. 10% Large Cap Value. Therefore, if you want similar diversification, then have a look at the IFA portfolios or some of David Booths portfolios. Paul Merriman is an evidence-based investor and favors statistics over feelings. But opting out of some of these cookies may affect your browsing experience. I plan to mirror this portfolio for my Roth IRA. Bogleheads 4 Fund Portfolio Review and Vanguard ETFs To Use Here's a performance backtest of the Merriman 4 Fund Portfolio from 1972 through 2022:Source: PortfolioVisualizer.com. The Merriman Financial Education Foundation is a registered 501(c)(3) organization founded in 2012. What is it, and how has it performed? Table 2: Three choices of bonds vs. U.S. Four-Fund Combo, 1970-2022 The portfolio is 100% stocks and is thus considered more risky than his Ultimate Buy and Hold Portfolio. Further, there are other lazy portfolios worth considering, such as the David Swensen Portfolio or the Ray Dalio Portfolio. 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. They have experienced long periods of underperformance, however. Its just a great option if you want to make sure youre getting the best there is out there! All of his podcasts, articles, and many other greats resources are without any profit motive. Necessary cookies are absolutely essential for the website to function properly. There are a few alternatives to Paul Merrimans portfolios. Deductions are permissible to the extent of the law. Similarly, there have been periods where a global portfolio outperformed a U.S. portfolio. Well, significantly different results if the start date is Jan 2007 rather than the way back you used. Paul Merriman: 'This Is Not Just a Problem With Retail Amateur The portfolios represent a great opportunity for you to get more money from your investment portfolios. Here we run through some of the most robust options. Emerging Markets and international small cap stocks have crushed the U.S. market historically, for example, as they're considered riskier, and investors are compensated for that greater risk. Small stocks have beaten large stocks historically, presumably because investors demand higher returns for riskier, more volatile small-cap stocks compared to large-cap stocks. How do they compare to the very best portfolios? His ultimate portfolio is a beautiful example of how diversification can bring higher returns without higher risk. TIPS are likely only needed at or near retirement. Do, Read More Larry Connors RSI 25 & RSI 75 (It Still Works) | Trading StrategiesContinue, Last Updated on April 18, 2023 How To Find and Generate Trading Ideas. You also speak to the benefits of having a foreign component(s) as part of an effort to reduce the correlation which exists in a 100 percent domestic portfolio. (2023), How To Build a 3 Fund Portfolio at Fidelity in 2023. His ultimate portfolio is a beautiful example of how diversification can bring higher returns without higher risk. Below you can see the returns of Paul Merrimans portfolios. In his book, the Intelligent Asset Allocator, Bill Bernstein examines academic research and historical performance to arrive at a relatively simple to implement portfolio that he expects to perform well for the long-term. Further, there. The 8 Best Small Cap ETFs (4 From Vanguard), The 5 Best EV ETFs Electric Vehicles ETFs, VIG vs. VYM Comparing Vanguards 2 Popular Dividend ETFs, The Best Vanguard Dividend Funds 4 Popular ETFs, The 5 Best Emerging Markets ETFs (1 From Vanguard) for 2023. To be precise, Merriman aimed at size and value factors. The trading rules are compiled into a package where you can purchase all of them (recommended) or just a few of your choice. This is close enough I'd call it a toss-up. You can find them here. By rejecting non-essential cookies, Reddit may still use certain cookies to ensure the proper functionality of our platform. 8 Lazy ETF Portfolios Oblivious Investor Paul Merriman is a big fan of small caps and value on which he has done extensive research. 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.