How do gold and commodities perform in an All-Weather portfolio? - Seedly
 

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Asked by Anonymous

Asked on 05 Dec 2019

How do gold and commodities perform in an All-Weather portfolio?

Is it a vital part of an All-Weather portfolio? or are there other types of investments that i should consider?

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Paridhi Jhunjhunwala
Paridhi Jhunjhunwala, Associate at Kristal.AI
Level 7. Grand Master
Answered on 06 Dec 2019

Hi!

Gold and other commodities are an integral part of the All Weather strategy. These assets have a negative correlation with other investments like equities and bonds, which in turn provides diversification benefits in the portfolio. This combination of assets in the All Weather portfolio will then be able to provide stable returns throughout the economic cycle. Asset allocation in a typical All Weather portfolio is as follows:

  • 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)

You can also explore two variants of the strategy, All Weather - Aggressive and the All Weather - Unleveraged for different risk appetites on the Kristal.AI platform. The aggressive version is only available to accredited investors due to the complexity of underlying assets.

Hope this is helpful! Happy investing!

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