Performance & Risk Metrics (2016-2026)
| Metric | Global Equity Momentum (GEM) | Golden Butterfly |
|---|---|---|
| CAGR (10-Year Annualized Return) | 12.3% | 8.5% |
| Max Drawdown | -17.8% | -11.0% |
| Sharpe Ratio (Risk-Adjusted Return) | 0.72 | 0.68 |
| Strategy Type | Tactical Asset Allocation (Trend following) | Passive Portfolio (Factor Tilted) |
| Rebalancing Frequency | Monthly (on momentum signals) | Annually (fixed target weights) |
GEM Philosophy
Gary Antonacci's GEM uses a two-step momentum filter. First, relative momentum compares US equities against international equities, selecting the leader. Then, absolute momentum checks whether the winner beats T-Bills — if not, the portfolio rotates to bonds. This dual filter captures global equity upside while protecting against prolonged bear markets.
Golden Butterfly Philosophy
Created by Tyler (PortfolioCharts), the Golden Butterfly evolves the Permanent Portfolio by adding a 20% slice of small-cap value stocks. The five equal slices (total market stocks, small-cap value, long bonds, short bonds, and gold) capture the historical value factor premium while maintaining broad economic resilience across prosperity, deflation, inflation, and recession.
Key Differences Explained
This is a clash between tactical and passive approaches. GEM actively rotates 100% of capital based on momentum signals, while the Golden Butterfly stays fully invested in five equal slices. GEM has significantly higher CAGR (12.3% vs 8.9%) but requires monthly signal-following, while the Golden Butterfly delivers steady, low-volatility returns with minimal effort.
- Strategy Type: GEM is a tactical, actively-managed approach. Golden Butterfly is a passive, buy-and-hold approach.
- Return vs Risk: GEM delivered 12.3% CAGR with -17.8% max drawdown (Sharpe: 0.72). Golden Butterfly delivered 8.9% CAGR with -15.0% max drawdown (Sharpe: 0.68).
- Maintenance: GEM requires monthly signal monitoring. Golden Butterfly needs only annual rebalancing.
Side-by-Side Pros and Cons
GEM Strengths & Limits
- Higher historical CAGR through global diversification
- Absolute momentum filter protects during bear markets
- Access to international equity outperformance cycles
- Monthly signal-checking required
- Can whipsaw in sideways markets
- Tax-inefficient due to frequent rotations
Golden Butterfly Strengths & Limits
- Higher returns than Permanent Portfolio via value factor tilt
- Better Sharpe ratio than most passive portfolios
- Maintains structural resilience across economic regimes
- Small-cap value can underperform for extended periods
- More complex than simple 60/40 with 5 asset classes
- Gold and long bonds can be volatile independently
Which Strategy is Right For You?
Choose GEM if: You're comfortable with monthly signal-checking and want maximum long-term returns. GEM's tactical approach captures equity rallies while protecting during bear markets.
Choose Golden Butterfly if: You prefer a passive, set-and-forget portfolio with strong risk-adjusted returns. The Golden Butterfly's value factor tilt and structural diversification deliver solid returns with very low maintenance.
Deep Dive
Want to master this strategy? Read our definitive Global Equity Momentum (GEM) Guide to understand the core rules, historical performance, and exact ETF implementations.