Golden Butterfly Portfolio
Created by Portfolio Charts (Tyler)
A five-wing evolution of the Permanent Portfolio that adds growth without giving up its resilience.
What is it?
The Golden Butterfly is a five-asset portfolio popularized by the portfolio-analysis website Portfolio Charts, designed as an evolution of Harry Browne's Permanent Portfolio. It splits assets equally into five 20% wings: US large-cap stocks, US small-cap value stocks, long-term Treasury bonds, short-term Treasury bonds, and gold.
The philosophy
The core idea is to keep the resilience that made the Permanent Portfolio attractive — an equal mix of growth, deflation, and inflation hedges — while addressing its biggest weakness: comparatively weak long-run growth. Small-cap value stocks have historically produced some of the highest long-term returns of any public asset class, so adding a dedicated 20% sleeve to them, funded by trimming the original stock allocation, is meant to meaningfully raise the portfolio's compound growth rate without abandoning the "something works in every environment" philosophy.
How it works
Large-cap stocks (20%) and small-cap value stocks (20%) together form the growth engine, with small value historically adding a return premium during strong economic periods. Long-term bonds (20%) do best during deflation and falling-rate periods, and short-term bonds (20%) act as a stable ballast that also holds up well during recessions. Gold (20%) remains the dedicated inflation and crisis hedge. Because each wing responds to a different environment, rebalancing periodically sells whichever wing has become relatively expensive and adds to whichever has lagged.
Who is it for?
The Golden Butterfly suits investors who liked the defensive character of the Permanent Portfolio but want a higher expected long-run return and are comfortable adding a volatile-but-historically-rewarded asset class (small-cap value) to get it. It fits a medium-to-long time horizon and a moderate risk tolerance — more aggressive than the Permanent Portfolio, but still meaningfully more conservative than a standard 60/40 or all-equity approach.
Key strengths & trade-offs
Its strength, according to backtested history, is a favorable balance of strong risk-adjusted returns and historically shallow maximum drawdowns compared to many other five-asset portfolios. The trade-off is that small-cap value can go through long stretches of underperformance relative to large-cap growth stocks (as it did for much of the 2010s), which can test an investor's patience, and — like the Permanent Portfolio — its 40% combined bond allocation is sensitive to sustained periods of rising interest rates.
Risk Level
Rebalancing
annual
Number of Assets
5
Best For
Long-term investors wanting a smoother ride than all-equity
Current Allocation
| US Large Cap | 20% |
| US Small Cap Value | 20% |
| US Long-Term Bonds | 20% |
| US Short-Term Bonds | 20% |
| Gold | 20% |
Performance: 25.7-Year Backtest
Data for Gold starts 2000. Simulation covers 25.7 years.
$10,000 initial investment → $71,761
Annual Returns
| Strategy | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Golden Butterfly Portfolio | -2.7% | +4.9% | +8.4% | +18.7% | +5.5% | +13.6% | +10.1% | +10.2% | -11.8% | +14.6% | +16.2% | +14.9% | +5.9% | +3.1% | +12.1% | -5.4% | +11.6% | +10.8% | -1.0% | +14.7% | +12.7% | +8.2% | -4.8% | +5.2% | +16.1% | +20.9% | -0.2% |
Key Metrics
ETFs in This Strategy
Based on historical data. Past performance does not guarantee future results. This site is for educational purposes only and does not constitute investment advice.