Ray Dalio's All-Weather Portfolio
The Ray Dalio All Weather Portfolio is a simplified, publicly accessible version of the risk parity approach used by Bridgewater Associates, the world's largest hedge fund. Ray Dalio developed the original All Weather concept internally in the 1990s, but the portfolio became widely known after Tony Robbins described it in his 2014 book Money: Master the Game following an interview with Dalio. Unlike Bridgewater's institutional version -- which uses leverage -- the retail version is an unlevered, static allocation designed to hold up across all economic environments.
Investment Philosophy
Dalio's framework organizes economic environments by two dimensions: whether growth is rising or falling, and whether inflation is rising or falling. Each quadrant favors different asset classes -- stocks do well in rising growth and low inflation; gold and commodities in rising inflation; long-term bonds in falling inflation; and inflation-linked bonds in stagflation. The All Weather portfolio holds exposure across all four quadrants, weighted not by dollar amount but by risk contribution -- a concept known as risk parity. In the unlevered retail version, this logic produces a large bond allocation, because bonds must be held in greater size than stocks to contribute equivalent risk.
Who It's For
This portfolio suits investors who want broad coverage across economic scenarios and are comfortable accepting a bond-heavy allocation in exchange for lower volatility than an equity-concentrated portfolio. It is appropriate for moderate to conservative investors, or those who want a low-maintenance core allocation that does not require tactical adjustments. For investors who want more equity exposure within an all-weather framework, see the Permanent Portfolio and Golden Butterfly.
Pros
- Designed to perform acceptably in all economic environments, not just equity bull markets
- Lower historical drawdowns than equity-heavy portfolios during recessions and financial crises
- Simple, low-maintenance structure that requires only annual rebalancing
- Strong conceptual foundation backed by decades of institutional research
Cons
- Heavy bond allocation means the portfolio lags significantly during extended equity bull markets
- The retail version cannot replicate the leverage used in Bridgewater's institutional model, limiting return potential
- The stock-bond diversification benefit broke down during the high-inflation period of 2022
- Gold and commodities can have extended periods of poor nominal returns
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Target Allocation
Performance Snapshot
Rolling Returns
| Period | Low | Average | High |
|---|---|---|---|
| 1 Year | -19.7% | +9.4% | +43.1% |
| 3 Year | -3.1% | +9.0% | +25.0% |
| 5 Year | +2.1% | +9.1% | +21.5% |
| 10 Year | +4.0% | +9.3% | +15.3% |
Growth of $10,000
Historical Drawdown
Percentage decline from the portfolio's peak value at each point in time.
Rolling Returns
Annualised return for each rolling period ending on that date.
Annualised return for each 1Y period ending on that date.