Low. This portfolio is optimized for stability. Over the long term, it will likely underperform when compared to the S&P 500 index, but it is designed to protect your investment during turbulent market conditions. For example, during the recession of 2008, while the market experienced ~50% losses, this All Weather Portfolio experienced lower losses.
You prefer lower volatility in your investment and would like to minimize the possibility of large drawdowns during periods of recessions.
Markets move through different economic environments, and no single asset class consistently performs well in every one. The All Weather Portfolio is built around the principle of balancing investments so that the portfolio can remain resilient across four broad economic conditions: rising growth, falling growth, rising inflation, and falling inflation.
Inspired by the investment philosophy developed by Ray Dalio, the portfolio combines a diversified mix of equities, government bonds, inflation-protected assets, and commodities. Equities provide long-term growth potential, while high-quality bonds can help provide stability and diversification during periods of economic weakness. Inflation-sensitive assets and commodities can provide an additional source of diversification when inflation rises and traditional assets come under pressure.
Rather than attempting to predict which economic environment will occur next, the All Weather Portfolio seeks to prepare for a range of possible outcomes. Its underlying philosophy is that investors should balance risk across asset classes so that no single economic scenario can disproportionately determine the portfolio's outcome.
The All Weather Portfolio aims to provide a smoother long-term investment experience through diversification across asset classes and economic regimes, making it suitable for investors who prioritize risk management, resilience, and consistency alongside long-term capital growth.
For this portfolio, we have identified the below companies:
| Company | Description |
|---|---|
| Invesco DB Commodity Index Tracking Fund (DBC) | This fund tracks a diverse basket of commodities, offering protection against rising inflation as the prices of raw materials typically increase during these economic periods. |
| SPDR Gold Shares (GLD) | Holding physical gold, this fund acts as a safe-haven asset that traditionally preserves value during periods of economic uncertainty, market volatility, and currency weakness. |
| iShares 7-10 Year Treasury Bond ETF (IEF) | This fund invests in intermediate-term U.S. government bonds, which provide stability and reliable income, typically performing well when economic growth slows or during deflation. |
| iShares 20+ Year Treasury Bond ETF (TLT) | By holding long-term U.S. government bonds, this fund offers strong portfolio protection during recessions and deflationary environments, as its value generally rises when interest rates fall. |
| Vanguard Total Stock Market ETF (VTI) | This fund provides broad diversification across the entire U.S. stock market, designed to capture long-term growth and capitalize on periods of strong economic expansion. |