Allocation Lab

All Weather Portfolio (Ray Dalio)

Created by Ray Dalio (Bridgewater Associates)

Balances risk, not just dollars, across growth, inflation, and rate environments.

Current Allocation

US Large Cap30%
US Long-Term Bonds40%
US Intermediate Bonds15%
Gold7.5%
Commodities7.5%

How This Strategy Maps to ETFs

Asset ClassWeightETF
US Large Cap30%SPY
US Long-Term Bonds40%TLT
US Intermediate Bonds15%IEF
Gold7.5%GLD
Commodities7.5%DBC

Performance: 20.4-Year Backtest

Data for Commodities starts 2006. Simulation covers 20.4 years.

All Weather Portfolio (Ray Dalio)
── Actual ETF data   ╌╌ Proxy index data

$10,000 initial investment → $38,912

Annual Returns

2006–2016

'06'07'08'09'10'11'12'13'14'15'16
+7+13-6+7+13+21+4+1+17-6+6

2017–2026

'17'18'19'20'21'22'23'24'25'26
+110+18+13+9-11+3+9+14+4

Key Metrics

CAGR+6.85%
Max Drawdown-21.0%
Volatility8.2%
Sharpe Ratio0.61
Sortino Ratio0.96
Best / Worst Year2011 / 2022

What is it?

The All Weather Portfolio is a public, simplified version of the asset allocation philosophy behind Bridgewater Associates' institutional risk-parity funds, popularized by founder Ray Dalio. It holds 30% stocks, 40% long-term bonds, 15% intermediate bonds, 7.5% gold, and 7.5% commodities — a much larger bond allocation than a typical retail portfolio.

The philosophy

Dalio's insight was that asset returns are driven by surprises in two variables: economic growth and inflation, each of which can come in above or below expectations. A well-diversified portfolio should hold assets that perform well in each of the four resulting combinations, and — critically — it should be built by balancing the amount of risk each asset class contributes, not simply the dollar amount invested. Because bonds are historically much less volatile than stocks, a genuinely risk-balanced portfolio ends up holding far more dollars in bonds than in equities, which is why the public All Weather version is bond-heavy relative to a standard 60/40.

How it works

The 30% stock sleeve targets growth during periods of rising economic activity. The large 40%+15% bond allocation, split across long and intermediate Treasuries, is sized to contribute a similar amount of risk to the portfolio as the smaller equity sleeve, and it benefits when growth or inflation disappoints. Gold (7.5%) protects against high or rising inflation and currency devaluation, while commodities (7.5%) tend to do best during unexpected inflationary growth. Together, the five pieces are meant to smooth returns across the full growth/inflation matrix rather than concentrating risk in equities.

Who is it for?

This strategy suits investors who want genuine diversification beyond a stock/bond split and are comfortable holding a large allocation to bonds even when equities are rallying. It is well suited to more risk-averse, long-horizon investors who prioritize consistency and smaller drawdowns over squeezing out the highest possible average return, and who are willing to hold gold and commodities as permanent, not tactical, positions.

Key strengths & trade-offs

Its strength is smoother, more consistent returns and historically shallower drawdowns than equity-heavy portfolios, because no single macro surprise can hurt the whole portfolio equally. Its trade-off is a heavy dependency on long-term bonds, whose multi-decade bull market from the early 1980s to 2020 flattered risk-parity-style portfolios; in a sustained rising-rate environment, as seen in 2022, the large bond sleeve can drag on returns at the same time equities fall, since bond convexity works less favorably from a low-yield starting point.

Historical performance in context

All Weather earned its reputation for smoothness during the 2008 crisis, when its heavy long-Treasury allocation rallied hard as stocks fell, and through the calm 2010s when falling rates flattered its bond-centric risk-parity design. Its toughest test was 2022: with rates rising sharply from historically low levels, the large long- and intermediate-bond sleeves fell alongside stocks, and only the commodity slice provided real offset. That year exposed the strategy's core dependency — a bond bull market — and why its ballast works less powerfully from a low-yield starting point.

Common variations

A common adjustment is substituting some long Treasuries with TIPS for more direct inflation protection, or trimming duration after 2022. Investors seeking more growth often compare it with the equity-tilted Golden Butterfly, while those wanting simplicity move toward the Permanent Portfolio. See how a $10,000 stake would have grown on the All Weather growth page.

Risk Level

conservative

Rebalancing

annual

Number of Assets

5

Best For

Capital preservation, low tolerance for drawdowns

Before using this allocation

  • • Match the strategy's drawdown history to the amount of loss you could tolerate without abandoning the plan.
  • • Check whether its stock, bond, international, and inflation-sensitive sleeves address the risks that matter for your time horizon.
  • • Compare the same historical period and rebalancing rule against alternatives before changing a target allocation.

Related reading

Try This Strategy in the Simulator →

Or see the growth of $10,000 in the All Weather Portfolio (Ray Dalio) over the past 30 years.

Hypothetical historical performance based on backtested data. Past performance does not guarantee future results. This site is for educational purposes only and does not constitute investment advice. Full disclaimer