Paul Merriman Ultimate Buy and Hold Portfolio Review & ETFs (2024)

Рет қаралды 10,765

Күн бұрын

Get this portfolio here: optimizedportfolio.com/go/ubh...
The Paul Merriman Ultimate Buy and Hold Portfolio specifies very specific market segments based on historical outperformance. Here we’ll take a look at its components, performance, and the best ETFs to use in its implementation.
// TIMESTAMPS:
00:00 - Intro
00:13 - Who Is Paul Merriman?
00:52 - What Is the Ultimate Buy and Hold Portfolio?
04:23 - Performance
05:07 - How To Build with ETFs
06:12 - 80/20 and Long Bonds
07:00 - 100% Stocks
08:06 - Outro
// SUMMARY:
The Ultimate Buy and Hold Portfolio is a lazy portfolio designed by Paul Merriman for the "ultimate" buy-and-hold investing strategy.
Merriman looked historically at the very specific market segments that had the greatest and most consistent historical outperformance across stocks of all cap sizes globally. Specifically, he maintains that the term “ultimate” must describe a portfolio that has consistently outperformed the S&P 500 with no additional risk.
Consistent with investing wisdom of a 60/40 portfolio being the “center of gravity” between risk and return, the Ultimate Buy and Hold Portfolio allocates 60% to stocks and 40% to bonds. However, Merriman acknowledges that this asset allocation may not be appropriate for everyone, and suggests that investors should choose their own allocation based on their own personal risk tolerance.
The Paul Merriman Ultimate Buy and Hold Portfolio asset allocation is as follows:
6% U.S. Total Stock Market
6% U.S. Large Cap Value
6% U.S. Small Cap Stocks
6% U.S. Small Cap Value
6% U.S. REITs
6% International Developed Markets Stocks
6% International Value
6% International Small Cap Stocks
6% International Small Cap Value
6% Emerging Markets Stocks
12% Short-Term Treasury Bonds
20% Intermediate-Term Treasury Bonds
8% TIPS
Merriman’s best-in-class ETF recommendations rely heavily on fund offerings from Avantis, a relatively new ETF provider founded by former Dimensional employees. The important takeaway is that we would expect Avantis funds to provide reliable factor targeting and indeed they have in their short lifespan so far. We can construct the Ultimate Buy and Hold Portfolio like this:
AVUS - 6%
RPV - 6%
IJR - 6%
AVUV - 6%
VNQ - 6%
AVDE - 6%
DFIV - 6%
FNDC - 6%
AVDV - 6%
AVEM - 6%
VGSH - 12%
SPTI - 20%
VTIP - 8%
► Get the UB&H Portfolio for M1 here: optimizedportfolio.com/go/ubh...
► My modified 80/20 version: optimizedportfolio.com/go/ubh...
► Aggressive 10 Fund Portfolio (100% Stocks): optimizedportfolio.com/go/ubh...
Get Merriman's newest book here: amzn.to/3sCfXPU
Read the blog post here: www.optimizedportfolio.com/ul...
Shout-out ‪@PaulMerrimanSoundInvesting‬ thanks for all you do!
#ultimateportfolio #paulmerriman #lazyportfolio
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Disclaimer: The information presented is not financial advice, investing advice, or tax advice; it is for entertainment purposes only. Investment products discussed are for illustrative purposes only. It is not a recommendation to buy, sell, or transact in any of the products mentioned. I try my best to provide accurate information, but I can’t guarantee 100% accuracy. Do your own due diligence. Past performance does not guarantee future returns. Investing in the stock market - especially with leverage - is risky. Read my lengthier disclaimer here: www.optimizedportfolio.com/te...
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Пікірлер: 88

@OptimizedPortfolio Жыл бұрын

What do you think of Paul Merriman and his Ultimate Buy and Hold Portfolio? Get it here: m1finance.8bxp97.net/yRJdBB

@Kep19901 Жыл бұрын

I'm currently doing the 70/30 us/int. Vanguard etfs from his configurator. Any thoughts on that tool/those etfs? I provided the link in a separate comment. Hope to hear back.

@OptimizedPortfolio Жыл бұрын

@@Kep19901 Thanks for sharing, Keith. I've never played with it. I'll check it out.

@Kep19901 Жыл бұрын

@Optimized Portfolio its interesting. Thanks.

@christianperalta3226 Жыл бұрын

I'm a fan of Paul Merriman work.

@OptimizedPortfolio Жыл бұрын

Me too, Christian! Thanks for watching.

@couldbe8348 11 ай бұрын

@@OptimizedPortfoliofor someone with more than 25 years till retirement is this the most effective strategy as opposed to just investing in stocks 90%?

@michalnovak1661 10 ай бұрын

@@couldbe8348 statistically speaking yes.

@TallDarkStranger60 Жыл бұрын

For the past 25 years I have used a 100 percent stock portfolio, half of which is similar to Paul Merriman's value/small bias, which did well pre-2009. The other 50 percent was in sector specific index funds....equally divided between staples/tech/health, which did well post 2009. The overall portfolio has comfortably beaten the S&P 500 with less drawdown and a lower standard deviation. 5 more years to go, so I am going to start adding WHOSX.

@OptimizedPortfolio Жыл бұрын

Thanks for sharing!

@TJ-Stackin Жыл бұрын

Thanks for sharing!

@OptimizedPortfolio Жыл бұрын

You bet!

@dannyjensen4954 5 ай бұрын

I am a fan. Thanks for all your coverage of all the asset classes.

@OptimizedPortfolio 5 ай бұрын

Thanks, Danny! Glad you found it useful.

@mere_cat Жыл бұрын

Love it. I use a modified version because I don’t have all funds available in my 401k.

@OptimizedPortfolio Жыл бұрын

Awesome, thanks for sharing, Jesse!

@xaldath4265 Жыл бұрын

PM UBH is the inspiration for my own portfolio, but I didn't go even weight across the board. I underweighted international, specifically developed, due the high correlation to US large cap and home country tax bias. The way I see it, I'd have to outperform by a significant margin to hold a truly even(ish) global diversified portfolio compared to overweighting US. So far, so good. During 2022, I beat the S&P by more than 10% and expect most years to be comparable so not a bad headstart considering I didn't start "actively" investing until June 2021.

@OptimizedPortfolio Жыл бұрын

Thanks for sharing!

@igiveupfine Жыл бұрын

i just read your whole factor investing article last night, so i'm a little fresh on the details from it. i remember thinking "wait, so i believe they are saying, 'given how we can now categorize all the risk/info about a company now (from the factor 5 classifications), we DON'T, need to parity all this stock investing risk with bonds' " if i remembered that correctly, i wonder if that is/was a bit of a footnote you should have mentioned.

@OptimizedPortfolio Жыл бұрын

Hi. That would have been the incorrect conclusion to draw from whatever you read. Bonds are a completely different asset with their own factors (Term and Credit) and are still uncorrelated to stocks, thus making them still a crucial component in a well-diversified factor-tilted portfolio. More generally, identifying sources of risk from which we think returns come and mitigating portfolio volatility and risk are two different things.

@seanharrington4768 Жыл бұрын

Bro- fantastic video post 👏👏

@OptimizedPortfolio Жыл бұрын

Thanks, Sean!

@suzylogan3524 Жыл бұрын

I think it’s interesting as value and small cap are perhaps due to do well over this next cycle.

@OptimizedPortfolio Жыл бұрын

Indeed, Suzy. I'm hoping Size and Value are making their comebacks.🤞

@xaldath4265 Жыл бұрын

AVUV FTW!

@robtang8079 Жыл бұрын

I've swapped out REITS for utilities+healthcare, defensive sectors but they also seem to pretty consistently outperform VNQ. That being said, adding healthcare-focused etf makes the portfolio pretty healthcare heavy since there will be overlap with SPY. Adding XLV or VHT + VPU decreases max drawdown noticeably as well.

@OptimizedPortfolio Жыл бұрын

Thanks for sharing!

@ebrahimhabib477 Жыл бұрын

To complicated one I have been watching Paul marriman lately at his Podcast he recommends one balanced fund like vanguard target date fund plus a one small cap fund

@OptimizedPortfolio Жыл бұрын

Indeed, more funds than most lazy portfolios.

@henriquesalame Жыл бұрын

Which website is shown on 3:20 so I can try some asset classes' backtests? Thanks.

@OptimizedPortfolio Жыл бұрын

PortfolioVisualizer

@dr.lefort1596 Жыл бұрын

Would you still taper an 80/20 UBH towards 60/40 as you entire retirement? Or is your 80/20 UBH intended to stay constant long term?

@OptimizedPortfolio Жыл бұрын

The first one.

@captainnitrousx1331 9 ай бұрын

The average person does have the ability to make monthly contributions of any substance to make gains in that many investments. Just get the ETF S&P 500 OR Ttyl stk market index and make monthly contributions good times and bad. later on add bonds, cash! Make it easy and simple to keep the good habit of investing.

@OptimizedPortfolio 8 ай бұрын

With fractional shares nowadays, it doesn't matter.

@smalltalk.productions9977 Жыл бұрын

thanks for the effort and sharing. another informative YT vid. i am an appreciative subscriber. now, what would Paul Merriman suggest for a newly retired couple (69/65) with $100k annual pension, no mortgage, and $1.5mil savings? thumbs up.

@OptimizedPortfolio Жыл бұрын

Thanks! Merriman has articles and model portfolios on retirement allocations on his website.

@dawsonspath2257 8 ай бұрын

Great job! I would throw this entirely in Vanguard Wellesley (VWIAX) and walk away, never look at it again - you are set for life and leaving a lot to your children if you have some 🙂

@JonTheDisciple Жыл бұрын

It's a nice idea but I feel like it's unnecessary with funds like AVGE coming out that do basically the same thing.

@OptimizedPortfolio Жыл бұрын

Good point! Simplicity is always nice. This one slices and dices a lot and definitely isn't for everyone. Just note a portfolio like the UBH here has much more aggressive factor tilts than something like AVGE. And AVGE has no bonds.

@davidsoltesz1867 Жыл бұрын

How does this compare to your Ginger Ale portfolio?

@OptimizedPortfolio Жыл бұрын

Great question, David. It's actually very similar but mine doesn't slice and dice as much because I don't directly target large cap value or small cap blend.

@fbizri100 3 ай бұрын

Isn't buying only value or only small cap etfs a mistake (value traps, low quality companies, etc..) ? This is why combined small cap+value were created, or am I wrong perhaps?

@OptimizedPortfolio 3 ай бұрын

Via a broad index, nah you'd probably be fine. But yes, a joint Value+Profitability consideration is likely best, which is Avantis's approach. Even S&P indexes like the one VIOV tracks screen for earnings.

@michalnovak1661 Жыл бұрын

Anybody here could assume best UCITS ETFs for doing something similar? I suppose there will be more european guys reading this. For now I have basically stocks only Intl 4-fund portfolio (based on Merriman research) composed of this, but dont know if thats the best solution long term. All of them are accumulating so after time test all tax free except dividends being paid to country of etf domicile-assume 15 % being it Ireland, but cant do anything with that. IWVL - intl value large cap IWDA - intl large cap blend WSML - intl small cap USSC - us scv, as there is no ucits etf being scv intl Also im not 100 % sure with intl, looking at demographics for example suggests US will do better, if anybody has good data or assumptions how to improve this, highly appreciated. Thanks

@martindohnal55 Жыл бұрын

Základ VWCE a k tomu ZPRV, ZPRX a případně IS3S a máš pěkné faktorové portfolio.

@michalnovak1661 Жыл бұрын

@@martindohnal55 jo na to ZPRV uz jsem taky prisel a vymenil IWDA za VWCE :) Jediny co neni tak je us small cap - byl, ale evropske etfko, ted nvm z hlavy ticker symbol presel na ESG variantu small capu, coz neni hra ktere se chci ucastnit.

@s7cc7r Жыл бұрын

Why not use SCHD to replace bonds for safer income/value growth?

@OptimizedPortfolio Жыл бұрын

First, SCHD and bonds are two completely different investments. Secondly, SCHD is basically just U.S. large cap value stocks. The UBH here already covers that segment with a much more targeted fund in RPV. Lastly, it would be incorrect to imply that SCHD is somehow "safer" than bonds.

@TJ-Stackin Жыл бұрын

No use SCHD in place of RPV.

@jetblack8250 9 ай бұрын

100% AVUV

@OptimizedPortfolio 4 күн бұрын

brave

@brianrothenberg9823 Жыл бұрын

Why haven't you added AVES alongside AVUV and AVDV?

@OptimizedPortfolio Жыл бұрын

Not part of Merriman's design on this one. AVEM covers Emerging Markets here. (I didn't design this.)

@brianrothenberg9823 Жыл бұрын

@@OptimizedPortfolio, I meant in your portfolio. You said you were long AVUV and AVDV.

@OptimizedPortfolio Жыл бұрын

@@brianrothenberg9823 Right. I don't own AVES. I touched on it and DGS here: www.optimizedportfolio.com/emerging-markets-value-etfs/

@stevec.7017 Жыл бұрын

Any broker will like this. They always put people in 20 positions or more. Go back to a simple 3 to 6 fund portfolio.

@OptimizedPortfolio Жыл бұрын

This one definitely slices and dices a lot and isn't for everyone.

@Beck-Stein Жыл бұрын

So in other words the ultimate growth in portfolio was equal to sp500. Lol. Even with draw downs, the grad total portfolio value is the same monetarily. Not many beat the sp500. Its win percentage is in the 90th percentile. This is in regards to paul’s first suggested portfolio layout.

@OptimizedPortfolio Жыл бұрын

What?

@Beck-Stein Жыл бұрын

@@OptimizedPortfolio the first paul merriman portfolio did not beat the sp500

@OptimizedPortfolio Жыл бұрын

@@Beck-Stein Which "first" one are you referring to? Use more words. If you mean the first one in my video, yes it did, at least over roughly the past 23 years, as I showed and explained at 04:27, on both a general and risk-adjusted basis. The latter is more significant in this context because after all, it's a 60/40 portfolio. As I also noted, its volatility was 1/3 less and its drawdown was significantly smaller compared to the S&P 500, which we would obviously expect. Not sure what you're looking at or getting at, mate.

@Beck-Stein Жыл бұрын

@@OptimizedPortfolio 7.07 vs 6.97! Come on bro. Not even a percentage point between them. Much easier to invest in one portfolio than numerous others all with differing fees. Get real matey.

@OptimizedPortfolio Жыл бұрын

@@Beck-Stein You're still missing the point entirely. As I've explained multiple times, 60/40 and 100% stocks are two very different portfolios. Apples and oranges. The 60/40 has significantly lower risk profile (volatility and drawdown). That is, for basically the same return, we had much lower risk with the 60/40 UBH. Put another way, for the same risk profile, we had a much higher return per unit of risk (Sharpe and Sortino) with the 60/40 UBH. Of course, as I noted in the video, that's exactly what Merriman set out to design. If you want to compare 100% stocks and argue purely about CAGR, that's what's at 07:44. On a separate note, tiny differences in CAGR add up to huge differences in portfolio value over time. Once again, I already explained all this in the video. I'm not sure I can make it more clear. Lastly, the UBH is "one portfolio."

@PassivePortfolios 7 ай бұрын

Merriman, like Swedroe, is another factor fanboy. This strategy has underperformed the S&P 500 index in the last 25 years because these alleged factor premiums did not show up. It may have worked great during the time period the French-Fama study used that was a long time ago. Now everyone knows about these factor premiums so they have been arbitraged away. You can't buy past performance, only future performance.

@OptimizedPortfolio 7 ай бұрын

Every single one of your comments across my videos suffers greatly from recency bias, and most are simply not true. Merriman's proposed strategy has underperformed the S&P in the last 25 years due to its inclusion of international stocks, NOT factor tilts. In the future, if you want to have a fruitful discussion or present an argument, please check your facts and understand what you're talking about first.

@arthurlp6381 Жыл бұрын

35% gold 30% value large cap and 30% value small cap and 5% short term bonds beats this and most other indexing gurus.

@diotitus Жыл бұрын

Lmao bruh Gold?! Why so much?

@OptimizedPortfolio Жыл бұрын

I doubt that and that's way too much gold for my tastes but thanks for sharing, Arthur.

@dr.lefort1596 Жыл бұрын

@@OptimizedPortfolio Do you hold any gold in your portfolios?

@OptimizedPortfolio Жыл бұрын

@@dr.lefort1596 No, though I've designed some that include gold.

@mbabcock111 7 ай бұрын

Why not just buy VGT, QQQ, and VOO for some of the highest returns?

@OptimizedPortfolio 7 ай бұрын

Because past returns of those funds you mentioned don't indicate future returns. This portfolio tilts toward risk factors with the highest expected returns; they are not captured by the funds you mentioned.

@shmerlingz Жыл бұрын

So much fuss and so little gain

@OptimizedPortfolio Жыл бұрын

Define "little." Tiny % points add up to huge amounts over time. With some rounding, a 12% CAGR on $10k invested 50 years ago resulted in a $3M portfolio, while a 10% CAGR yielded half that at $1.5M: www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=1&timePeriod=4&startYear=1972&firstMonth=1&endYear=2023&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchmark=false&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&asset1=LargeCapBlend&allocation1_1=25&allocation1_2=100&asset2=LargeCapValue&allocation2_1=25&asset3=SmallCapValue&allocation3_1=25&asset4=SmallCapBlend&allocation4_1=25 Many people also have much more "fuss" in their portfolios trying to pick stocks.

@Beck-Stein Жыл бұрын

I agree. How many funds need to be invested? A shit ton. Fancy way to say sp500.

@OptimizedPortfolio Жыл бұрын

@@Beck-Stein A 60/40 portfolio with appreciable factor diversification is entirely different from the S&P 500. Apples and oranges.

@theotherview1716 11 ай бұрын

@@Beck-Steinyou sound like a novice who has just recently started to dabble.