Strategy

All‑Weather vs Traditional Portfolios

All‑Weather Portfolio Strategy

A diversified investment approach designed to perform in any economic climate.

See Performance Comparison

What Is the All‑Weather Strategy?

The All‑Weather strategy doesn’t try to forecast the future. Instead, it builds a portfolio across different asset classes—equities, bonds, commodities, gold, and cash—that perform differently in times of growth, inflation, deflation, or recession. The goal is smoother returns and lower risk over the long run.

Equities / Growth

Long‑Term Bonds

Commodities & Gold

Cash & Liquidity

Portfolio Composition Example

Asset Class Allocation (%)
Global Equities30%
Long‑Term Government Bonds40%
Intermediate Bonds15%
Commodities & Gold10%
Cash / Inflation‑Linked Assets5%

Real‑World Performance vs 60/40

Below is a historical growth chart comparing the All‑Weather portfolio against a 60/40 portfolio and the S&P 500, based on data from OfDollarsAndData.

All‑Weather vs 60/40 vs S&P500 Growth Curve
Metric All‑Weather 60/40 Stocks‑Bonds S&P 500 (Equity Only)
Annualized Return (1973‑2022)~ 9.3 %~ 9.3 %~ 10.4 %
Drawdowns (Peak to Trough)≈ ‐25 %≈ ‐40 %≈ ‐50 %

Fonte: OfDollarsAndData – Real Growth of $1, 1973‑2022. Dati storici. Passato non garantisce risultati futuri.

How It Works

The All‑Weather portfolio uses multiple asset classes that respond differently in various economic climates. Key mechanisms include:

  • Diversification across assets like stocks, long & intermediate bonds, commodities & gold, cash
  • Balancing risk exposure rather than just dollar amounts
  • Rebalancing periodically to maintain target allocations
  • Designing to reduce drawdowns and smoother volatility

Performance & Risks Compared

  • In very strong equity bull markets, a 60/40 or equity‑only portfolio often outperforms All‑Weather.
  • All‑Weather tends to give up some of the upside in strong equity phases.
  • But in downturns and during inflation spikes, All‑Weather usually holds up better.
  • Requires maintaining discipline (not selling in panic), rebalancing, and accepting “shorter highs”.

Frequently Asked Questions

What if inflation is very high?
Commodities & inflation‑linked assets in All‑Weather help preserve value. Traditional portfolios may lose purchasing power.
Is All‑Weather less risky?
Compared to equity‑heavy or 60/40 in crashes, yes — it reduces drawdowns. But it’s not risk‑free.
Do you lose growth?
Yes, in bull markets you might underperform portfolios more biased toward equities.
How often should I rebalance?
Typically annually, or when allocations drift significantly (e.g. >5% off target).

Contact & Resources

If you want to learn more, compare other portfolios, or get support, feel free to reach out or explore the sources below.

Disclaimer: This page is educational. Not financial advice. Data is historical and may change.

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