What is the Golden Butterfly Portfolio?

The Golden Butterfly is a passive, all-weather portfolio that builds on Harry Browne's Permanent Portfolio concept by adding a small-cap value tilt. Allocation: 20% US total market stocks, 20% US small-cap value stocks, 20% long-term bonds, 20% short-term bonds, 20% gold. The small-cap value tilt (20%) historically delivers higher returns through the size and value factor premiums, while the gold and bond allocations provide diversification across economic regimes.

Which performs better: Golden Butterfly or All Weather?

Historically, the Golden Butterfly has delivered slightly higher returns than All Weather due to its small-cap value tilt and more balanced bond allocation (20% long + 20% short vs All Weather's 55% bonds). Golden Butterfly historical CAGR: ~8.8–9.2%. All Weather historical CAGR: ~8.7%. Both have similar Sharpe Ratios. Golden Butterfly has lower interest rate sensitivity than All Weather due to its shorter average bond duration.

What is the difference between Golden Butterfly and All Weather?

Key differences: (1) Equity allocation — Golden Butterfly splits equities between total market (20%) and small-cap value (20%); All Weather has only 30% broad equities. (2) Bonds — Golden Butterfly has 20% long + 20% short bonds; All Weather has 40% long + 15% intermediate (much more interest rate sensitive). (3) No commodities in Golden Butterfly; All Weather has 7.5% commodities. (4) Same gold allocation (20% vs 7.5% in All Weather). Golden Butterfly is less bond-heavy and more equity-tilted.

How did Golden Butterfly perform in 2022 vs All Weather?

In 2022, Golden Butterfly outperformed All Weather because its shorter average bond duration (20% short-term bonds) was far less sensitive to rising interest rates than All Weather's heavy long-bond exposure (40% long bonds). Small-cap value stocks also held up slightly better than broad equities. Both strategies suffered losses in 2022 due to the stock + bond simultaneous decline, but Golden Butterfly's damage was more contained.

Golden Butterfly vs All Weather: Which Portfolio is Better in 2026?

MK

Lukso Quantitative Researcher

Lukso designs and backtests rules-based quantitative strategies. He holds an MS in Quantitative Finance and leads research for systematic asset allocation at StrategyIndex.io.

Backtest Methodology

Backtests are based on historical monthly Total Return data (dividends reinvested) of proxy index ETFs. We assume zero transaction slippage, annual/monthly rebalancing frequency, and no leverage. All calculations are executed systematically without human discretion.

Data Sources & Integrity

Historical figures are sourced from Yahoo Finance API, Tiingo Cloud API, and FRED Federal Reserve Database.

Last Data Update: June 30, 2026

Educational Purpose Only & Disclaimer

All content and calculation tools on StrategyIndex.io are intended solely for educational, research, and informational purposes. They do not constitute financial advice, tax planning, investment recommendations, or legal counsel. Hypothetical backtesting results have inherent limitations and do not represent actual trading. Past performance is never an indicator or guarantee of future returns. Asset allocation models are subject to market volatility, tracking errors, and strategy breakdown. Consult a certified financial planner before making any investment decisions.