What is All Weather portfolio and what kind of returns can it get me?

Hi Anon,

The All Weather strategy is meant to help investors create a portfolio that can see them through all market ups and downs. Bridgewater Associates hedge fund manager Ray Dalio, one of history’s legendary investors, came up with this philosophy called, 'All Weather Portfolio' in the 1970s after the growing political tension in the US from Richard Nixon’s presidency. The portfolio is a blueprint that many have used since to allocate assets in a manner crafted to help you make money in any kind of economic environment. In the last 10 years, Dalio’s portfolio showed a 7.65% compound annual return (last update: October 2019). From the period of 1984 to 2013, Dalio’s strategies earned him a positive return 26 out of 30 years, with an average annual return of 9.7%.

The portfolio has an asset allocation of:

• 55% Fixed income (10% inflation-linked treasuries, 30% long duration bonds, 15% 3-7yr duration bonds)

• 30% Equity (Broad US market ETF, e.g. S&P 500, total stock market ETF, etc)

• 15% Commodities (Gold, and/or broad commodity tracking ETF)

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I've answered this just recently but can't find the link for it currently.

But anyway, Ray Dalio's famous all weather portfolio is a conservative portfolio of about 30% Equity, 55% Bonds, 7.5% Gold, 7.5% other Commodities.

It's created to potentially never lose money, while providing an upside 4-5% p.a projected return.

This is a portfolio I design for clients usually in their 50s as it has very little volatility, and can provide a source of dividend and coupon income while attempting to preserve capital.