Permanent Portfolio Review - Year 4
Posted: June 20th, 2022, 4:18 pm
Afternoon all
This is an ongoing experiment that I set up four 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 14 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:
Another disappointing portfolio return of -2.38%, with Gilts being the main culprit. The Gold holding as the outlier, up 16% over the past 12 months. As this is an exercise in the longer term results, I shall stick with the initial principle of rebalancing all holdings at the start of the 12 month cycle and capturing and redistributing the Gold profit into those assets that have fallen in value. The average return over this initial three year period is a tick over 3% p.a.
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 5.08% 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 8.66% over the last four years.
I also started a 'Golden Butterfly' portfolio last year but this is only two year's performance figures rather than the four 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 has been the poorest this year when compared to the other two. All elemenst reducing in value aside from Gold and the average return over the two years has been 1.65% - early days however.
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 ongoing experiment that I set up four 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 14 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:
Another disappointing portfolio return of -2.38%, with Gilts being the main culprit. The Gold holding as the outlier, up 16% over the past 12 months. As this is an exercise in the longer term results, I shall stick with the initial principle of rebalancing all holdings at the start of the 12 month cycle and capturing and redistributing the Gold profit into those assets that have fallen in value. The average return over this initial three year period is a tick over 3% p.a.
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 5.08% 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 8.66% over the last four years.
I also started a 'Golden Butterfly' portfolio last year but this is only two year's performance figures rather than the four 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 has been the poorest this year when compared to the other two. All elemenst reducing in value aside from Gold and the average return over the two years has been 1.65% - early days however.
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.