60/40 portfolio
Stocks / Indices
60%
Bonds
40%
MOST SIMPLE COMPOSITION WITH VERY GOOD PERFORMANCE, BUT ALSO MORE RISKY, BECAUSE LESS DIVERSIFIED
It can suffer high volatilities and an important Drawdown in some years, even if they are strongly attenuated compared to stock only,
Need ability to support these periods psychologically and financially
Big drop during the subprime for example, big performance after but it took a while.
All weather portfolio
Stocks / Indices
30%
Long Term State Bonds
40%
State Bonds Intermediate Term
15%
15% Gold (or 7.5% in Gold and 7.5% in commodities)
15%
THE MOST DIVERSIFIED, THE LESS RISKED AND THE MOST RELIABLE,
IT IS SUITABLE FOR CRASH, MARKETS WITHOUT TRENDS, AND AGAINST RISKS ON INDIVIDUAL STOCK
Permanent portfolio
Stocks / Indices
25%
State bonds
25%
Precious metals
25%
Cash
25%
AN ALTERNATIVE TO THE ALL WEATHER PORTFOLIO, A LITTLE LESS PERFORMING
so the all weather seems to be the best portfolio…
why using the others?
Hi CJ,
yes if you want security (low drawdown) and good
risk / return, it is.
But the others can offer a better return in long term by accepting a little more risk and volatility per period.
it can therefore be interesting to have several kind of portfolios.
They can also be all optimized, by including notions of timing and rebalancing, these are just 3 simple cases.