The 2-Fund Strategy
The simplest factor-tilted portfolio. Split evenly between the broad US market and US small-cap value. Merriman's data shows $10K grew to ~$6.5M over 55 years — vs. ~$3M for S&P 500 alone.
| Asset Class | ETF | Allocation | Expense |
|---|---|---|---|
| S&P 500 | VOO | 50% | 0.03% |
| US Small-Cap Value | AVUV | 50% | 0.25% |
Level up? The 4-Fund "Better" portfolio adds large-cap value and small-cap blend for smoother returns with nearly identical long-term performance to the full 10-fund portfolio.
The 4-Fund Strategy
Four funds covering the key US equity factors. Delivers returns nearly identical to the 10-fund portfolio with simpler management.
| Asset Class | ETF | Allocation | Expense |
|---|---|---|---|
| US Large-Cap Blend | AVUS | 25% | 0.15% |
| US Small-Cap Blend | AVSC | 25% | 0.25% |
| US Large-Cap Value | AVLV | 25% | 0.15% |
| US Small-Cap Value | AVUV | 25% | 0.25% |
The 10-Fund Ultimate Buy & Hold
Paul Merriman's flagship portfolio. 10 equity asset classes covering ~12,000 companies globally. Historically outperforms S&P 500 with similar or lower volatility.
| Asset Class | ETF | Allocation | Expense |
|---|---|---|---|
| US Large-Cap Blend | AVUS | 10% | 0.15% |
| US Large-Cap Value | AVLV | 10% | 0.15% |
| US Small-Cap Blend | AVSC | 10% | 0.25% |
| US Small-Cap Value | AVUV | 10% | 0.25% |
| Int'l Large-Cap Blend | AVDE | 10% | 0.23% |
| Int'l Large-Cap Value | AVDV | 10% | 0.36% |
| Int'l Small-Cap Blend | AVDS | 10% | 0.36% |
| Int'l Small-Cap Value | AVEE | 10% | 0.36% |
| REITs | VNQ | 10% | 0.12% |
| Emerging Markets | AVES | 10% | 0.36% |
The Fine Tuning Table
Each added asset class incrementally improves risk-adjusted returns. Small-cap value is the primary return driver.
| Portfolio | Funds | CAGR | $10K over 55yr | Sharpe |
|---|---|---|---|---|
| S&P 500 Only | 1 | 10.3% | $3.0M | 0.52 |
| + Small-Cap Value | 2 | 12.1% | $6.5M | 0.58 |
| + LC Value, SC Blend | 4 | 12.5% | $7.8M | 0.60 |
| Full 10-Fund | 10 | 13.2% | $10.4M | 0.63 |