Merriman's Ultimate Buy and Hold Portfolio

In the previous post, I pointed to an article by Paul Merriman on setting up an "ultimate buy and hold portfolio."

I'd like to lay out the portfolio, then build on that by comparing to some of his suggested portfolios.

The Portfolio:
(60% equities/40% bonds)
6% S&P 500
6% U.S. large cap value stocks
6% U.S. small cap value stocks
6% U.S. micro-capitalization stocks
6% U.S. REIT
6% international large cap stocks
6% international large cap value stocks
6% international small cap stocks
6% international small cap value stocks
6% emerging market stocks
40% divided between short and intermediate term bonds

What's good:
Annualized performance over 37 years (1970 - 2006): 13.1%. This handily beats, for instance, a 60/40 split between an S&P 500 fund and a bond index fund, which returned 10.4% over the 37 years and has more risk.

LOTS of diversification

Significant international exposure

What's bad:
There are a lot of pieces here. You may not know how to get all the pieces to this portfolio.

This isn't a trivial portfolio, and will require work for an investor to create and re-balance periodically.

50% of the equities in this portfolio are in international stocks. Are you ready for that?

Over the next few posts, I'll examine a few of his suggested portfolios, using Vanguard funds and ETFs, and compare/contrast them to this model portfolio.