Every year the legendary investing author and educator Paul Merriman and his team release their recommendations of “best in class ETFs” for each market segment suggested for his model portfolios. They usually line up with my own research and suggestions. The list for 2023 is below.
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By “best in class,” Merriman aims to identify funds with low fees and appreciable factor loadings – basically, getting the most exposure “bang” for your buck. These funds fit in his model portfolios like the 4 Fund Portfolio and the Ultimate Buy and Hold Portfolio.
The list below is from 2023. Note that these lists don’t necessarily have to line up with the strict calendar year. For example, Merriman may not publish the 2024 list until mid-2024.
Note that “International” or “Int’l” below refers to ex-US Developed Markets. Emerging Markets are specified as “EM”.
Remember that switching funds in a taxable account may create taxable events if you have gains. If you have losses, you may want to harvest them.
Lastly, the “best in class ETF” may or may not be suitable for you depending on your views on fees, factors, and active versus passive management. Do your own due diligence.
Paul Merriman Best in Class ETFs
|Market Segment||Best-in-Class ETF||Alternative Recommendations|
|U.S. Large Cap Blend||AVUS||VOO, VTI, IVV, SPLG, SCHX|
|U.S. Large Cap Value||RPV||VONV, IUSV, SCHV, SPYV|
|U.S. Small Cap Blend||IJR||VIOO, IWC, SCHA, SPSM|
|U.S. Small Cap Value||AVUV||VIOV, SLYV, IJS, RZV|
|U.S. REIT||VNQ||FREL, USRT, SCHH|
|Int’l Large Cap Blend||AVDE||VEA, IEFA, SPDW, SCHF|
|Int’l Large Cap Value||DFIV||EFV, VYMI, FIVA, DWX|
|Int’l Small Cap Blend||FNDC||VSS, SCZ, GWX, SCHC|
|Int’l Small Cap Value||AVDV||DLS|
|Emerging Markets||AVEM||VWO, IEMG, SPEM, SCHE|
|EM Large Cap Value||AVES||DFEV|
|EM Small Cap Blend||EEMS||DGS, EWX|
|Int’l REIT||—||VNQI, IFGL|
|Short-Term Bonds||VGSH||SHY, SPTS, SCHO|
|Int.-Term Bonds||SPTI||IEF, VGIT, SCHR|
Disclosures: I am long VOO, AVUV, VEA, AVDV, and DGS in my own portfolio.
Disclaimer: While I love diving into investing-related data and playing around with backtests, I am in no way a certified expert. I have no formal financial education. I am not a financial advisor, portfolio manager, or accountant. This is not financial advice, investing advice, or tax advice. The information on this website is for informational and recreational purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. Do your own due diligence. Past performance does not guarantee future returns. Read my lengthier disclaimer here.
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