Permanent portfolios have been very popular recently, mostly due to the strength of gold and Treasury bonds. Our Permanent Portfolio ETF Plan is a plan that consists of the following candidate funds:
| Asset Class | Ticker | Name |
|---|---|---|
| Commodities Precious Metals | GLD | SPDR Gold Shares |
| Commodities Precious Metals | SLV | iShares Silver Trust |
| Currency | FXF | CurrencyShares Swiss Franc Trust |
| Natural Resources | IGE | iShares S&P North Amer Natural Resources |
| REAL ESTATE | IYR | iShares Dow Jones US Real Estate |
| LARGE BLEND | VTI | Vanguard Total Stock Market ETF |
| Long-Term Bond | LQD | iShares iBoxx $ Invest Grade Corp Bond |
| SHORT GOVERNMENT | SHY | iShares Barclays 1-3 Year Treasury Bond |
| LONG GOVERNMENT | IEF | iShares Barclays 7-10 Year Treasury |
The three portfolios include:
- A static version Permanent Portfolio ETF Version that is mirroring permanent portfolio mutual fund PRPFX. The portfolio is re-balanced annually back to its target allocation.
- Permanent Portfolio ETF Plan Strategic Asset Allocation Moderate that allocates assets in an equally weighted fashion.
- Permanent Portfolio ETF Plan Tactical Asset Allocation Moderate that allocates assets dynamically based on cross-asset trends.
We compare the three asset allocation portfolios with PRPFX as follows:
| Portfolio/Fund Name | YTD Return | 1Yr AR | 1Yr Sharpe | 3Yr AR | 3Yr Sharpe | 5Yr AR | 5Yr Sharpe |
|---|---|---|---|---|---|---|---|
| Permanent Portfolio ETF Version | 3% | 6% | 55% | 13% | 117% | 8% | 65% |
| PRPFX | 0% | 3% | 65% | 12% | 89% | 8% | 65% |
| Permanent Portfolio ETF Plan Tactical Asset Allocation Moderate | 8% | 12% | 101% | 9% | 74% | 7% | 54% |
| Permanent Portfolio ETF Plan Strategic Asset Allocation Moderate | 6% | 10% | 73% | 15% | 111% | 7% | 43% |
[click to enlarge charts]
More detailed comparison
Our Permanent Portfolio ETF Version outperforms PRPFX, mostly due to the fees charged by the fund. On the other hand, year to date, the Permanent Portfolio ETF Plan Tactical Asset Allocation Moderate's outperformance is due to its lack of exposure in gold recently, which allowed it to sidestep the recent gold weakness.
Stocks, treasuries, gold/silver and foreign currencies are less correlated assets that hedge each other very effectively. Long term investors can look at these portfolios and see whether they can be used for their retirement investments such as IRA investments or taxable accounts.
Disclosure: We do not have any business relationship with the company or companies mentioned in this article. It does not set up retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.
