Merriman Ultimate

The Merriman Ultimate Portfolio by Paul Merriman seeks to diversify investments as broadly as possible across countries, company size, and valuation.

Asset Allocation


  • 6% Large Cap Blend
  • 6% Large Cap Value
  • 6% Small Cap Blend
  • 6% Small Cap Value
  • 6% Int’l Large Cap Blend
  • 6% Int’l Large Cap Value
  • 6% Int’l Small Cap Blend
  • 6% Int’l Small Cap Value
  • 6% Emerging Markets
  • 20% Intermediate Bonds
  • 20% Short Term Bonds¹
  • 6% REITs
Asset Notes
  1. Merriman specifically calls for 8% short term TIPS and 12% short term bonds.  I don’t have good data for TIPS, but in an effort to maintain his design intent I added it to the short term bond allocation.  Be sure to read Merriman’s explanation for why he chooses the funds he does.
Other Versions

Merriman describes several different versions of the portfolio that vary by the percentage of bonds. The one shown here is the “Moderate” version with 40% bonds. Here are two more options depending on your appetite for risk:

Aggressive — 0% bonds

Conservative — 60% bonds

Local Interpretations

Find country-specific versions and appropriate ETFs using the Performance charts.

Author


<strong>Paul Merriman</strong>
Paul Merriman

Paul Merriman is a retired investing adviser who continues to dedicate his time to investing education. You can read about the Merriman Ultimate portfolio at his website and learn about his philosophy in books like Grow And Protect Your Money.

Overview


The Merriman Ultimate portfolio (also commonly referred to as the Ultimate Buy and Hold portfolio) is a very broadly diversified portfolio that takes international, size, and value diversification to their logical extremes.

Domestic

  1. Large Cap
    • Blend
    • Value
  2. Small Cap
    • Blend
    • Value
  3. REITs

International

  1. Large Cap
    • Blend
    • Value
  2. Small Cap
    • Blend
    • Value
  3. Emerging Markets

Merriman often describes the choice of these ten assets by adding them one at a time and noting the progressive improvement of portfolio returns with every step. The resulting allocation represents his vision of the pinnacle of thoughtful diversification, which is the origin of the “Ultimate” name.

To determine the final percentages, Merriman advocates for equal weighting of each stock asset while adjusting the overall percentage to accommodate as many bonds that are necessary to dial the volatility back to whatever is comfortable for the investor. It thus combines an advanced factor investing mindset for stocks with an old-school view of bonds into a portfolio that a lot of investors can appreciate.

Books


Books about the Merriman Ultimate Portfolio, and others by Paul Merriman

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Articles


Insights that mention the Merriman Ultimate Portfolio

Alternatives


Portfolios with a similar structure or design intent

Sandwich Portfolio — Similar structure but with less factor diversity

Ideal Index Portfolio — The same basic idea with a single international fund

Larry Portfolio — A shared factor philosophy with a different allocation approach

Performance


Change the home country to translate the portfolio to local assets, currency, and inflation.