All-Weather Portfolio — Definition and Allocation
The All-Weather portfolio is Ray Dalio's investment strategy designed for all market conditions. Learn about allocation and operating principles.
What is an All-Weather Portfolio?
The All-Weather portfolio (literally "for all weather") is an investment strategy created by Ray Dalio, founder of Bridgewater Associates. The goal is a portfolio that performs well in every economic environment — growth, recession, inflation, and deflation.
Allocation
Classic All-Weather portfolio allocation:
- 40% — long-term bonds (20+ years)
- 30% — stocks (global market)
- 15% — medium-term bonds (7–10 years)
- 7.5% — gold
- 7.5% — commodities
Logic Behind the Strategy
Dalio identified 4 economic scenarios:
- Growth + low inflation → favorable for stocks
- Growth + high inflation → favorable for commodities and gold
- Decline + low inflation → favorable for long-term bonds
- Decline + high inflation → favorable for gold
Each asset class "covers" a different scenario, so the portfolio never loses dramatically.
Historical Results
- Average annual return: approximately 7.5%
- Maximum drawdown: approximately -12%
- Worst year (2022): approximately -3.9%
For comparison, the S&P 500 had drawdowns reaching -50% (2008–2009).
All-Weather vs 60/40
| Feature | All-Weather | 60/40 |
|---|---|---|
| Asset classes | 5 | 2 |
| Volatility | Low | Moderate |
| Average return | ~7.5% | ~8.5% |
| Inflation protection | Yes (gold, commodities) | Weak |
Disadvantages
- Lower returns than portfolios with higher stock allocation
- Complexity — 5 asset classes require rebalancing
- Long-term bonds lose when rates rise
How Freenance Can Help
Freenance enables tracking of multi-asset portfolios and comparing current allocation with target allocation. Perfect for managing an All-Weather strategy without spreadsheets.
👉 Manage an All-Weather portfolio in Freenance — freenance.io
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