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The All Weather Portfolio is arguably the most famous portfolio strategy ever shared with the public by a hedge fund manager. Designed by Ray Dalio — founder of Bridgewater Associates, the world's largest hedge fund — it promises something every investor wants: decent returns in good times, and protection in bad times. In this guide you'll get the exact allocation, the logic behind it, historical performance, the best ETFs to build it (for both US and European investors), and an honest assessment of its weaknesses.
Who Is Ray Dalio and Why Should You Care?
Ray Dalio founded Bridgewater Associates in 1975 and built it into a firm managing well over $100 billion. In 1996, Bridgewater launched the All Weather fund — a strategy based on a simple but powerful idea Dalio calls risk parity: instead of allocating money equally across assets, you allocate risk equally across assets.
The strategy remained institutional-only for two decades. Then, in 2014, Dalio revealed a simplified, individual-investor version of the All Weather allocation to Tony Robbins for the book MONEY: Master the Game. That five-ETF recipe is what most people mean today when they say "Ray Dalio All Weather Portfolio."
The Exact All Weather Portfolio Allocation
Here is the allocation Dalio shared publicly — simple enough to build with five low-cost ETFs:
| Asset Class | Allocation | Role in the Portfolio |
|---|---|---|
| US Stocks (total market or S&P 500) | 30% | Growth engine; performs best in periods of economic expansion |
| Long-Term Treasury Bonds (20+ years) | 40% | The largest single holding; profits when growth and inflation fall |
| Intermediate-Term Treasury Bonds (7–10 years) | 15% | Stability with lower interest-rate sensitivity |
| Gold | 7.5% | Protection against inflation surprises and currency debasement |
| Commodities (broad basket) | 7.5% | Protection against rising inflation and supply shocks |
The first thing most investors notice: only 30% in stocks, and a striking 55% in bonds. This is deliberate. Stocks are roughly three times more volatile than long-term government bonds, so a traditional 60/40 portfolio actually gets about 90% of its risk from the stock portion. Dalio's allocation balances risk contributions instead of dollar amounts.
The Logic: Four Economic "Seasons"
Dalio's core insight is that asset prices are driven by surprises relative to two forces: growth and inflation. That gives four economic environments — and crucially, nobody knows which one comes next:
| Environment | What Tends to Win | All Weather Component |
|---|---|---|
| Rising growth | Stocks, commodities | 30% stocks + 7.5% commodities |
| Falling growth (recession) | Long-term bonds, gold | 40% long bonds + 7.5% gold |
| Rising inflation | Commodities, gold | 7.5% gold + 7.5% commodities |
| Falling inflation (disinflation) | Stocks, long bonds | 30% stocks + 55% bonds |
Whatever "season" arrives, at least one large sleeve of the portfolio is designed to perform. The losers are cushioned by the winners — which is exactly why the strategy is called All Weather.
Historical Performance
Backtests of the simplified All Weather allocation (results vary slightly by data source and rebalancing assumption) paint a consistent picture. Past performance does not guarantee future results — treat these figures as orientation, not a promise:
| Metric | All Weather (approx.) | 60/40 Portfolio (approx.) | 100% S&P 500 (approx.) |
|---|---|---|---|
| Long-run annualized return | ~7–9% | ~8–9% | ~10% |
| Worst single year | ~−6 to −12% | ~−17 to −20% | ~−37% (2008) |
| Max drawdown (historical) | ~−12 to −20% | ~−30% | ~−51% |
| Volatility (std. deviation) | ~7–8% | ~10–11% | ~15–16% |
| Performance in 2008 | roughly flat | ~−17% | ~−37% |
The pattern is clear: the All Weather gives up some return in raging bull markets, but cuts drawdowns by half or more compared to a stock-heavy portfolio. On a risk-adjusted basis (return per unit of volatility), it has historically beaten both 60/40 and pure equities. We break the comparison down in detail in All Weather vs 60/40: Which Strategy Wins?.
⚠️ An honest warning about 2022: the All Weather had one of its worst years ever (roughly −15 to −20% depending on implementation), because stocks and long bonds fell together during an inflation shock. Gold and commodities helped, but the lesson stands: "all weather" does not mean "no storms." You can explore the live numbers on our All Weather Portfolio performance tracker.
How to Build the All Weather Portfolio with ETFs
For US Investors
| Sleeve | Allocation | Popular ETFs |
|---|---|---|
| US Stocks | 30% | VTI, VOO, SPY |
| Long-Term Treasuries | 40% | TLT, VGLT, EDV* |
| Intermediate Treasuries | 15% | IEF, VGIT |
| Gold | 7.5% | GLD, IAU, GLDM |
| Commodities | 7.5% | PDBC, DBC, GSG |
*EDV (extended duration) is a more aggressive substitute for TLT — higher sensitivity to falling rates, but also larger losses when rates rise.
For European (UCITS) Investors
EU retail investors generally cannot buy US-domiciled ETFs (PRIIPs regulation), so here is a UCITS-friendly translation — also available in EUR-hedged versions where noted:
| Sleeve | Allocation | Example UCITS ETFs |
|---|---|---|
| Global/US Stocks | 30% | VWCE (global) or S&P 500 UCITS such as VUAA / SPYL |
| Long-Term Gov. Bonds | 40% | US Treasury 20+yr UCITS (e.g. iShares DTLA) or EUR-hedged; alternatively long-dated Eurozone govvies |
| Intermediate Gov. Bonds | 15% | iShares $ Treasury 7–10yr UCITS (IBC5/CSBGU7) or Eurozone 7–10yr |
| Gold | 7.5% | Invesco Physical Gold, iShares Physical Gold (SGLN/4GLD) |
| Commodities | 7.5% | iShares Diversified Commodity Swap, WisdomTree Broad Commodities |
European investors should also weigh currency exposure: an unhedged 55% USD bond allocation adds significant FX risk. EUR-hedged share classes cost a little more but keep the strategy closer to its intended behavior. If you invest from Europe, our guides to the best bond ETFs in Europe and the best European ETFs overall go deeper into specific tickers.
Rebalancing: The Quiet Superpower
The allocation only works if you rebalance — selling a bit of what has risen and buying what has fallen. Practical rules that work well:
- Calendar rebalancing: once or twice per year is enough for most investors.
- Threshold rebalancing: rebalance whenever any sleeve drifts more than ~5 percentage points (or 20–25% relative) from target.
- Cash-flow rebalancing: if you invest monthly, simply direct new money to the most underweight sleeve — free rebalancing with no taxable sales.
Rebalancing forces the disciplined "buy low, sell high" behavior that most investors fail to do emotionally — and it is the mechanism that harvests the diversification benefit over time.
Strengths and Weaknesses: An Honest Assessment
| Strengths ✅ | Weaknesses ⚠️ |
|---|---|
| Dramatically smaller drawdowns than stock-heavy portfolios | Lags badly in strong equity bull markets (FOMO risk is real) |
| Robust across inflation, deflation, growth and recession | 55% in bonds hurts when interest rates rise sharply (2022!) |
| Simple: 5 ETFs, rebalanced once a year | Long-term bonds carry real interest-rate risk |
| Easy to stay invested psychologically | Lower expected long-run return than 100% equities |
| Decades of institutional track record behind the concept | Commodity ETFs can have unfavorable tax treatment (US: K-1/futures) |
All Weather vs. Permanent Portfolio vs. GEM
The All Weather is not the only "sleep well at night" strategy. Harry Browne's Permanent Portfolio (25% stocks / 25% long bonds / 25% gold / 25% cash) is even more defensive, while momentum-based approaches like GEM (Global Equities Momentum) aim to sidestep bear markets dynamically instead of diversifying statically. If you're deciding between them, read our head-to-head All Weather vs Permanent Portfolio comparison, the complete GEM strategy guide, and the live GEM strategy performance tracker.
Frequently Asked Questions
Is the All Weather Portfolio still a good idea in 2026?
The structural logic — balancing risk across economic environments — is timeless. However, with interest rates far above their 2010s lows, the large bond allocation now offers meaningful yield again, which actually improves the portfolio's forward-looking profile compared to the zero-rate era. The main risk remains a repeat of 2022-style simultaneous stock-and-bond declines during inflation shocks.
What is the exact Ray Dalio All Weather Portfolio allocation?
30% US stocks, 40% long-term Treasury bonds, 15% intermediate-term Treasury bonds, 7.5% gold, and 7.5% broad commodities — as shared by Dalio in Tony Robbins' book MONEY: Master the Game.
What was the All Weather Portfolio's worst year?
In most backtests of the simplified version, 2022 stands out as the worst modern year (roughly −15% to −20% depending on ETFs used), because stocks and long-duration bonds fell together. In the pre-2020 record, annual losses rarely exceeded about −6 to −12%.
Can I build the All Weather Portfolio in Europe?
Yes — using UCITS ETFs and physically backed gold/commodity ETCs, as shown in the table above. Consider EUR-hedged bond share classes to reduce currency risk, since the original strategy assumes a USD-based investor.
How often should I rebalance?
Once a year is sufficient for most people. Threshold-based rebalancing (when an asset drifts ~5+ percentage points from target) is slightly more efficient. Using new contributions to rebalance avoids taxes and transaction costs entirely.
Is the All Weather Portfolio good for retirees?
Its low drawdowns make it popular among retirees and near-retirees, since a large loss early in retirement (sequence-of-returns risk) is devastating. However, its lower growth means a lower sustainable withdrawal rate than a stock-heavy portfolio in many scenarios — it's a trade-off between safety and spending power.
What's the difference between the All Weather and Bridgewater's actual fund?
Bridgewater's institutional All Weather fund uses leverage, many more asset classes, and dynamic risk targeting. The public five-ETF version is a simplified, unleveraged approximation designed for individual investors.
The Bottom Line
The Ray Dalio All Weather Portfolio is not about beating the market — it's about not needing to predict the market. By balancing risk across growth and inflation scenarios, it historically delivered smooth, respectable returns with roughly half the pain of a conventional portfolio. For investors who value consistency over bragging rights, it remains one of the most battle-tested allocations ever published.
Want to see how it's performing right now? Check the live data on our All Weather Portfolio tracker, or compare it against the classic 60/40 in our strategy comparisons.
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