Update: Paul Merriman Best-in-Class Ultimate Buy & Hold Portfolio July 2019
Rules-Based Strategy Update: Paul Merriman Best-in-Class Ultimate Buy & Hold Portfolio
This is the July update to the Paul Merriman Best-in-Class Ultimate Buy & Hold Portfolio.
I have been listening to Paul Merriman and his podcasts for a long time now. In terms of buy and hold portfolios, he is one of the most vocal proponents of the buy and hold portfolio.
I think if buy and hold is your style, then reading and following portfolio update is required!
Like Coffeehouse Investor or the All-Weather portfolio, Merriman’s ultimate portfolio is a sort of set-it-and-forget-it type of portfolio. Other than annual rebalancing, the portfolio is very easy to set up and maintain.
Most importantly it provides HUGE diversification across multiple asset allocations.
You can continue to see the progress results of this system by subscribing to the Robotic Investing newsletter. I will email you whenever a new post goes live, including all of the strategy updates I track on the site.
Paul Merriman’s Ultimate Buy & Hold Portfolio Rules-Based Investing
Merriman describes the Ultimate Buy & Hold portfolio like this:
In a nutshell, the “ultimate” portfolio starts with the S&P 500 index SPX, -0.45%then adds small and equal portions of nine other carefully selected U.S. and international asset classes, each one of which is an excellent long-term diversification vehicle.
Setting up the portfolio is easy. Depending on the investor’s risk appetite, a number of ETFs are purchased in varying percentages. Obviously the more aggressive the investor is, the more skewed towards equities the portfolio will be.
Here is the breakdown from Merriman’s site:
For the purposes of Robotic Investing, I am going to keep track of the aggressive portfolio to see how this portfolio does over time.
Here are the rules/process for running this portfolio:
- Segment investment capital into 10 10% chunks.
- Purchase the following ETFs, placing 10% of capital in each one:
- VTI – Vanguard Total Stock Market
- RPV – Invesco S&P 500® Pure Value
- IJR – iShares Core S&P Small-Cap
- SLYV – SPDR® S&P 600 Small Cap Value
- VNQ – Vanguard REIT Index
- VEA – Vanguard FTSE Developed Markets
- EFV – iShares MSCI EAFE Value
- FNDC – Schwab Fundamental Intl Sm Co
- DLS – WisdomTree Intl Small Cap Div
- DGS – WisdomTree Emerging Markets SmCp
- Rebalance annually
As mentioned, this is his most aggressive strategy, and as a result it has no fixed income component. Investors interested in some buffer, should consider the Moderate or Conservative portfolios.
For tracking at Robotic Investing, I will be tracking the Aggressive portfolio to see how it compares against a straight-up S&P 500 buy and hold.
Monthly Signals: Paul Merriman’s Ultimate Buy & Hold Portfolio
There are no signals required for the Paul Merriman Ultimate Buy & Hold Portfolio. Simply buy and hold each of the ten ETFs.
There is no change for July 2019, other than annual rebalancing. However, the percentages of the positions were not that out of line with the intended allocation, so I did not make any rebalancing trades to minimize transaction costs. The system continues to hold all ten ETFs. The portfolio will be adjusted and rebalanced in July 2020.
Strategy Tracking & Performance: Paul Merriman’s Ultimate Buy & Hold Portfolio
Here is the portfolio tracker and performance chart for the Ultimate Buy & Hold portfolio. The Morningstar Portfolio Tracker is used to track all the systems at Robotic Investing. As you can see the strategy is struggling compared to the S&P 500. Portfolios like this will often lag the market when equities are on a strong bull run.
This portfolio was started on July 2nd, 2018.
Note: When reviewing the performance chart, compare only the Total Return to the Index return. The personal return is inaccurate due to how Morningstar handles cash.
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