Performance & Risk Metrics (2016-2026)
| Metric | Golden Butterfly | All Weather |
|---|---|---|
| CAGR (10-Year) | 8.5% | 7.2% |
| Max Drawdown | -11.0% | -11.9% |
| Sharpe Ratio | 0.68 | 0.60 |
| Volatility (StdDev) | 7.4% | 7.8% |
| Best Calendar Year | +18.2% | +16.8% |
| Worst Calendar Year | -5.8% | -6.2% |
| Number of Assets | 5 (equal 20% each) | 5 (risk-parity weighted) |
| Rebalancing | Annually or ±5% band | Annually |
Golden Butterfly Philosophy
The Golden Butterfly evolves Harry Browne's Permanent Portfolio by replacing the generic US equity slice with two components: total market stocks and small-cap value stocks. This adds a factor premium (the size and value factors have historically outperformed large-cap growth over multi-decade periods). The five equal 20% slices — Total Market, Small-Cap Value, Long Bonds, Short Bonds, and Gold — create a balanced exposure to growth, recession, inflation, and deflation.
All Weather Philosophy
Ray Dalio's All Weather Portfolio allocates by risk contribution rather than dollar amounts. Because bonds are less volatile than stocks, risk-parity logic allocates more dollars to bonds (40% in long-term Treasuries + 15% intermediate) to equalize each asset's risk impact. The 30% equity, 7.5% gold, and 7.5% commodities provide growth and inflation protection. The result is a portfolio where no single economic regime can dominate losses.
Key Differences
- Growth Engine: Golden Butterfly's small-cap value tilt (20%) provides a higher expected return premium. All Weather's 30% equity allocation is more conservative but diversified across global markets.
- Inflation Protection: All Weather holds commodities (7.5%) in addition to gold (7.5%), providing broader inflation hedging. Golden Butterfly relies on gold alone (20%) for its inflation hedge, but with double the allocation.
- Bond Allocation: All Weather is heavily bond-weighted (55% total) due to risk-parity logic. Golden Butterfly splits bonds evenly between long and short duration (20% each, 40% total), providing a more balanced duration profile.
- Simplicity: Both portfolios use 5 ETFs and annual rebalancing. Implementation complexity is nearly identical.
- 2022 Stress Test: Both suffered during the simultaneous stock/bond crash, but Golden Butterfly's lower bond concentration and higher gold weight provided slightly better downside protection.
Which Strategy is Right For You?
Choose Golden Butterfly if: You want a slightly higher CAGR with a small-cap value growth tilt, believe in factor investing, and prefer equal-weight simplicity. Best for long-term buy-and-hold investors who can tolerate occasional factor underperformance.
Choose All Weather if: You follow Ray Dalio's risk-parity philosophy, want broader commodity exposure, and prefer a portfolio designed to minimize the impact of any single economic surprise. Best for conservative investors who prioritize stability over growth.