Papa Bear Portfolio
The Papa Bear Portfolio is the most aggressively factor-tilted of Paul Merriman's "bear" family of portfolios, designed by the investing author and educator behind the Paul Merriman Foundation. Merriman, who spent decades as a financial advisor and now focuses on investor education, built the Papa Bear as the most comprehensive expression of his factor-based investing philosophy: maximum diversification across global equity asset classes with deliberate tilts toward small-cap and value stocks, where the historical evidence for return premiums is strongest.
Investment Philosophy
Merriman's approach is grounded in the Fama-French factor model and the documented small-cap and value premiums. The Papa Bear takes this further than the Mama Bear Portfolio by maximising exposure to these factors across US large-cap blend, large-cap value, small-cap blend, small-cap value, international equivalents of each, and emerging markets — creating a highly granular multi-sleeve equity portfolio. The underlying argument is that factor diversification across many equity segments produces better risk-adjusted long-run returns than a plain total market fund.
Who It's For
The Papa Bear is suited to investors with a high risk tolerance, a very long time horizon, and strong conviction in the factor investing thesis. It is best approached by investors who have educated themselves on the evidence for size and value premiums and can maintain discipline during extended periods when these factors underperform growth or blend strategies.
Pros
- Maximum factor diversification across US and international equity asset classes
- Small-cap and value tilts aim to deliver return premiums above what a total market index fund provides
- Grounded in decades of academic research on asset pricing and factor investing
Cons
- High complexity — managing a large number of distinct fund sleeves requires careful rebalancing
- Factor tilts can underperform plain index funds for years, testing investor patience
- Requires access to low-cost factor-tilted index funds across all sleeves, which may not be available in all accounts
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Average Allocation
Based on historical average weights across all rebalance periods.
Performance Snapshot
Rolling Returns
| Period | Low | Average | High |
|---|---|---|---|
| 1 Year | -16.2% | +13.2% | +61.4% |
| 3 Year | -1.3% | +12.5% | +33.9% |
| 5 Year | +2.0% | +12.5% | +27.4% |
| 10 Year | +5.4% | +12.1% | +19.0% |
Growth of $10,000
Historical Drawdown
Percentage decline from the portfolio's peak value at each point in time.
Rolling Returns
Annualised return for each rolling period ending on that date.
Annualised return for each 1Y period ending on that date.