About Strategy
A retail adaptation of Ray Dalio's risk-parity concept from Bridgewater. Designed to perform well across all economic environments through structured risk profiling.
Performance Metrics (20162026)
| CAGR (10-Year) | 7.2% |
| Max Drawdown | -11.9% |
| Sharpe Ratio | 0.60 |
| Volatility (StdDev) | 7.8% |
| Best Year | +16.8% |
| Worst Year | -6.2% |
| Strategy Type | Passive Portfolio |
| Risk Profile | Low |
Asset Allocation
The All Weather Portfolio splits capital across five asset classes: 30% Global Equities (VT), 40% Long-Term Treasury Bonds (TLT), 15% Intermediate-Term Bonds (IEF), 7.5% Gold (GLD), and 7.5% Commodities (PDBC). The heavy bond weighting is intentional bonds are less volatile than stocks, so 40% in long bonds provides roughly equal risk contribution to 30% in equities.
Execution Rules
- Purchase assets in these weights: 30% Equities, 40% Long-Term Treasuries, 15% Intermediate Treasuries, 7.5% Gold, 7.5% Commodities.
- Rebalance annually to return all assets to target configurations.
- Long bonds compensate for equity crashes, while gold and commodities offset unexpected spikes in inflation.
ETF Proxies Used in Our Backtest
- Vanguard Total World Stock ETF (VT) 30% global equities
- iShares 20+ Year Treasury Bond ETF (TLT) 40% long-term bonds
- iShares 7-10 Year Treasury Bond ETF (IEF) 15% intermediate bonds
- SPDR Gold Shares (GLD) 7.5% gold
- Invesco Optimum Yield Diversified Commodity ETF (PDBC) 7.5% commodities
All Weather Allocation
Recommended Allocation
Enter performance inputs above to calculate weights.
Ray Dalio All Weather Portfolio: History & Background
The All Weather Portfolio is a retail-friendly adaptation of the investment philosophy pioneered by Ray Dalio, the founder of Bridgewater Associates the world's largest hedge fund managing over $150 billion in assets. The original "All Weather" strategy was created in 1996 as an internal Bridgewater fund designed to deliver consistent returns regardless of the prevailing economic environment.
The public version of this portfolio was popularized by Tony Robbins in his 2014 book "Money: Master the Game," where Dalio shared a simplified version for individual investors. The core philosophy is built on the concept of risk parity rather than allocating equal dollar amounts to each asset class, the portfolio allocates equal risk. Since stocks are roughly 3x more volatile than bonds, bonds receive a proportionally larger dollar allocation (40%) to balance their risk contribution against equities (30%).
The genius of the approach lies in its four-quadrant framework: the portfolio is designed to hold assets that thrive in each of four economic regimes rising growth, falling growth, rising inflation, and falling inflation. Equities perform well during growth periods, bonds excel when growth slows, and gold and commodities protect against inflationary surprises.
All Weather Portfolio: Deep Dive Guide
Want full details on ETF selection, rebalancing, inflation scenarios, and how All Weather compares to the Permanent Portfolio and GEM? Read our comprehensive Ray Dalio All Weather Portfolio: Complete Guide.
All Weather vs Permanent Portfolio
Allocation, risk and historical performance compared.
All Weather vs 60/40
Which portfolio wins on CAGR, drawdown and Sharpe?
GEM vs All Weather
Passive buy-and-hold vs tactical momentum switching.
Best Bond ETFs for Europeans
EUR-hedged, short and long duration UCITS bond ETFs.
All Weather Portfolio Performance: Pros & Cons
Strengths
- Extremely low maintenance set and forget with annual rebalancing
- Historically low max drawdown (-11.9%) compared to pure equity portfolios
- True diversification across growth, deflation, and inflation regimes
- Backed by institutional-grade research from Bridgewater Associates
- Suitable for risk-averse investors and retirees
Limitations
- Heavy bond allocation (55%) underperforms in rising rate environments (as seen 2022)
- Lower CAGR (7.2%) than tactical or equity-heavy strategies
- Commodities exposure adds complexity and tracking costs
- Simplified retail version lacks the dynamic leverage used by Bridgewater
- Gold and commodity ETFs may have higher expense ratios
Ideal for: Conservative investors prioritizing capital preservation, retirees who cannot afford large drawdowns, and anyone seeking a truly passive, all-weather approach. Pairs well with a small tactical satellite allocation for enhanced returns.
Learn More & Guides
Limitations
- Heavy bond allocation (55%) underperforms in rising rate environments (as seen 2022)
- Lower CAGR (7.2%) than tactical or equity-heavy strategies
- Commodities exposure adds complexity and tracking costs
- Simplified retail version lacks the dynamic leverage used by Bridgewater
- Gold and commodity ETFs may have higher expense ratios
Ideal for: Conservative investors prioritizing capital preservation, retirees who cannot afford large drawdowns, and anyone seeking a truly passive, all-weather approach. Pairs well with a small tactical satellite allocation for enhanced returns.
Learn More & Guides
Related Strategies
Permanent Portfolio (PP)
Harry Browne's 4x25% allocation � simpler equal-weight approach to all-weather investing. CAGR: 6.8%
Classic 60/40 Portfolio
The institutional benchmark � simpler but with higher drawdowns. CAGR: 8.2%
Golden Butterfly
Enhanced Permanent Portfolio with small-cap value tilt. CAGR: 8.5%