Permanent Portfolio Review - Year 3
Posted: June 17th, 2021, 10:34 am
Morning all
This is an experiment that I set up three years ago to see if Harry Browne's 'Permanent Portfolio' would work in the modern era. Currently I run a HYP, IT portfolio and passive portfolio and wanted to see if a Permanent Portfolio strategy would be less hassle and better wealth-wise for me for one/two/all portfolios once I retire in about 13 years time. The exercise started out with me investing a notional £200,000, equally split between the four asset classes and rebalancing once a year so that growth is captured and distributed equally for a further 12 months. Another year has passed and the results are below:
A disappointing portfolio return of 1.46%, with the Gilt holding falling 7.68% and Gold falling 6.81%. As this is an exercise in the longer term results, I shall stick with the initial principle of rebalancing the growth from the FTSE All Share holding that rose 20.80% back into those assets that have fallen in value. The average return over this initial three year period is a tick over 5% p.a. and it will be interesting to see if this return is sustained.
I am also following a stock/Gold 50/50 portfolio as has been mentioned by 1nvest previously and the results of this are as follows:
So, over the past 12 months, this approach has worked better return-wise (no gilts) with a 7.14% appreciation in capital terms. As with the Permanent Portfolio, I shall rebalance equally for another 12 months and see what the position is then. The average return of the Stock / Gold portfolio is 10.78% over the last three years.
I also started a 'Golden Butterfly' portfolio last year but this is only one year's performance figures rather than the three years for the portfolios above. This portfolio includes a small cap exposure into the Permanent Portfolio and again, it will be interesting to see what the longer term results are when compared to the others above.
The overall portfolio performance for the Golden Butterfly this year was a decent return of 7.61% even allowing for the downturns in Gilt and Gold exposure - the small cap element increased in value by 34.32% over the year which admittedly was at a low point when invested owing to the pandemic.
It will be interesting over the years to see what the results are and whether these simple, relatively hassle-free strategies might just be what works for me eventually. It will also be interesting to see what the average annual returns are so that if this is a strategy I adopt, what a sensible withdrawal rate looks like.
I hope some of you find it interesting!
Cheers, OLTB.
This is an experiment that I set up three years ago to see if Harry Browne's 'Permanent Portfolio' would work in the modern era. Currently I run a HYP, IT portfolio and passive portfolio and wanted to see if a Permanent Portfolio strategy would be less hassle and better wealth-wise for me for one/two/all portfolios once I retire in about 13 years time. The exercise started out with me investing a notional £200,000, equally split between the four asset classes and rebalancing once a year so that growth is captured and distributed equally for a further 12 months. Another year has passed and the results are below:
A disappointing portfolio return of 1.46%, with the Gilt holding falling 7.68% and Gold falling 6.81%. As this is an exercise in the longer term results, I shall stick with the initial principle of rebalancing the growth from the FTSE All Share holding that rose 20.80% back into those assets that have fallen in value. The average return over this initial three year period is a tick over 5% p.a. and it will be interesting to see if this return is sustained.
I am also following a stock/Gold 50/50 portfolio as has been mentioned by 1nvest previously and the results of this are as follows:
So, over the past 12 months, this approach has worked better return-wise (no gilts) with a 7.14% appreciation in capital terms. As with the Permanent Portfolio, I shall rebalance equally for another 12 months and see what the position is then. The average return of the Stock / Gold portfolio is 10.78% over the last three years.
I also started a 'Golden Butterfly' portfolio last year but this is only one year's performance figures rather than the three years for the portfolios above. This portfolio includes a small cap exposure into the Permanent Portfolio and again, it will be interesting to see what the longer term results are when compared to the others above.
The overall portfolio performance for the Golden Butterfly this year was a decent return of 7.61% even allowing for the downturns in Gilt and Gold exposure - the small cap element increased in value by 34.32% over the year which admittedly was at a low point when invested owing to the pandemic.
It will be interesting over the years to see what the results are and whether these simple, relatively hassle-free strategies might just be what works for me eventually. It will also be interesting to see what the average annual returns are so that if this is a strategy I adopt, what a sensible withdrawal rate looks like.
I hope some of you find it interesting!
Cheers, OLTB.