Everyone talks about investing, but few explain how to build portfolios that last. However, Paul Merriman has done the homework by testing strategies that mix simplicity with serious results. His work cuts through the noise and presents options investors can understand and use. And each portfolio reflects a different level of risk, letting investors choose what fits best. Here are portfolio strategies worth knowing.
The 2-Fund Strategy
The 2-Fund Strategy is very simple. It uses only two funds: the S&P 500 and U.S. small-cap value. Nothing more. Even with just these two, the strategy has beaten many bigger portfolios. That makes it powerful because it adds a stock type that has frequently outperformed the S&P 500 over long periods.
The 10-Fund Portfolio
What sets the 10-Fund Portfolio apart is its broad coverage. This includes 10 equity asset classes: U.S., international, REITs, and emerging markets. By diversifying this broadly, it has historically kept returns strong while cutting back on volatility. In fact, many simulations show it did better than simpler portfolios when markets turned turbulent.
The REIT Inclusion Strategy
The REIT Inclusion Strategy is a way to add real estate without the work of managing property. Real estate investment trusts offer inflation protection and steady income. They also bring extra diversification beyond stocks. Here’s the interesting part—REITs have actually beaten the S&P 500 during several periods of high inflation.
The U.S. 4-Fund Portfolio
The U.S. 4-Fund Portfolio spreads money across large-cap blend, small-cap value, large-cap value, and small-cap blend. So, that means growth and value sectors are both covered without overcomplicating things. However, here’s the surprise: this entire setup is U.S.-only, so it skips international equities and currencies entirely.
The All-Value Portfolio
Instead of chasing pricey growth stocks, the All-Value Portfolio sticks with value—companies trading cheaper relative to fundamentals like earnings or book value. It invests in U.S. and international markets, and Paul Merriman’s 1970–2016 study showed 12.1% annual returns, ahead of blended portfolios at 11%. The strategy began with Benjamin Graham, the “father of value investing.”
The Worldwide 4-Fund Portfolio
With the Worldwide 4-Fund Portfolio, money is split evenly into four buckets: U.S. large-cap, U.S. small-cap, international large-cap, and international small-cap. This setup broadens exposure and cuts home-country bias. Also, the bonus comes from international small-cap stocks. Being smaller and flexible, they adapt quickly and usually capture stronger growth in emerging markets.
The 50/50 U.S.-International Allocation
In this portfolio, 50% is invested in U.S. stocks and 50% in international stocks. That even balance helps spread risk and keeps access to growth both at home and abroad. Here’s the twist: over the long run, international stocks have actually outperformed U.S. stocks, showing how diversification can reward investors.
The Target-Date Portfolio
Imagine setting up a portfolio that changes with you over the years. That’s exactly what a Target-Date Portfolio does. It aligns with your age by reducing risk over time. Perfect for retirement planning with minimal maintenance. The story is simple; it begins boldly and ends safely, matching your life’s timeline.
The Small-Cap Value Add-On Strategy
Paul Merriman’s Small-Cap Value Add-On Strategy boosts returns while keeping investing simple. By adding a small allocation of small-cap value stocks to an existing fund, investors can enhance performance without overhauling their portfolio. These undervalued companies often deliver strong gains, providing a “turbo boost” to an already solid foundation.
The Tax-Managed Portfolio
Taxes can quietly eat into investment returns. The Tax-Managed Portfolio helps reduce that impact by using asset location strategies to lower the tax bite. It works especially well for taxable accounts and higher earners. With smart placement of funds, investors can keep more of what their portfolio actually earns.
