Paul Merriman Ultimate Buy And Hold Portfolio: Backtest, Allocations, and Performance Analysis

The Merriman Ultimate Buy And Hold Portfolio by Paul Merriman aims to diversify investments as widely as possible across asset classes (bonds & stocks), countries, company size, and valuation. The goal is to have aa portfolio that achieves good risk-adjusted returns.

You implement Paul Merriman Ultimate Buy and Hold Portfolio strategy by using ETFs only. The good part is that you do not need to pick individual stocks and bonds, it’s all “passive” and an rebalancing now and then. It’s simple, exactly as the way it was meant to be by Paul Merriman.

According to our backtests over the past 16 years, Paul Merriman’s ultimate portfolio has generated a compound annual return of 3.95% with a maximum drawdown of -37.10%. The annual return is low, but it’s partially explained by lower risk.

Let’s look at the portfolio in more detail:

Who Is Paul Merriman

Paul Merriman is a nationally recognized authority on mutual funds, index investing, and asset allocation.

After retiring in 2012 from Merriman Wealth Management, which he founded in 1983, Paul created The Merriman Financial Education Foundation, dedicated to providing investors of all ages with free information and tools to make informed decisions in their own best interest and successfully implement their retirement savings program.

Paul is the author of eight books, including, We’re Talking Millions! 12 Simple Ways to Supercharge Your Retirement; Financial Fitness Forever: 5 Steps to More Money, Less Risk, and More Peace of Mind; Live It Up Without Outliving Your Money and the “How To Invest” series.

He writes a regular column for The WSJ’s MarketWatch.com and produces a multi-award-winning weekly podcast, “Sound Investing,” named by Money magazine as the best money podcast. Subscribers to his free twice-monthly newsletter numbered more than 30,000 in 2021.

What Is The Merriman Ultimate Buy And Hold Portfolio

Paul Merriman’s Ultimate Buy and Hold Portfolio is a passive portfolio designed by Paul Merriman and is a buy and hold investment strategy. It’s meant to be simple and understandable for every novice retail investor.

Merriman analyzed the individual market segments with the highest and most stable historical performances among stocks of all capitalization sizes and stock classes (growth, value, and both) worldwide to develop the portfolio.

Merriman himself updates the Ultimate Buy and Hold Portfolio figures annually and changes his “best-in-class” ETF recommendations based on tracking, factor exposure, and fees from time to time.

The final buy-and-hold portfolio allocates 60% stocks and 40% bonds to balance risk and return. This distribution provides long-term growth from stocks, combined with volatility and risk reduction from bonds.

However, this asset allocation may not be suitable for all investors, which is why Merriman advises investors to choose their own allocation based on their personal risk tolerance.

Merriman argues that the term “ultimate” should describe a portfolio that consistently outperforms the S&P 500 without additional risk. Did it the portfolio accomplish that? Below we have backtested the portfolio and you can judge yourself.