Permanent Portfolio
Permanent Portfolio
Where it stands today
Our calculation, 1968-04 – 2026-09
Growth of $10,000
Where it came from
Harry Browne (1933-2006) was an American writer, investment adviser and libertarian activist, later the Libertarian Party presidential nominee in 1996 and 2000. He came to investing advice through the high-inflation 1970s, when the usual stock-and-bond mix lost purchasing power for years. Portfolio Mutiny notes that real S&P 500 value fell about 64% from the 1968 peak to 1982 and needed some 24 years to recover in real terms. The Permanent Portfolio grew out of the question of how to stay safe when nobody can predict which economic conditions come next.
Secondary accounts say Browne worked out the early versions with a small team that included Terry Coxon, John Chandler and Charles Smith. Their earlier approach had been to bet on a direction, for example towards gold. The new idea was the opposite: spread money across stocks, bonds, natural resources and cash and avoid market timing altogether. This was set out in the 1981 book Inflation-Proofing Your Investments, written by Browne and Coxon. One account says the title is misleading, since the book argues for a strategy that suits a period when inflation is brought under control as well as one when it is not.
Browne then simplified the design. The 1987 book Why the Best-Laid Investment Plans Usually Go Wrong is described as the point where the plan was reduced to equal 25% shares in U.S. stocks, Treasury bills, long-term Treasury bonds and gold. The fullest public statement is Fail-Safe Investing: Lifelong Financial Security in 30 Minutes (September 1999). It presents the four-part portfolio as protection in four economic conditions: prosperity (stocks, long bonds), inflation (gold), tight money / recession (cash, T-bills) and deflation (long Treasuries).
In 1982 the Permanent Portfolio mutual fund (ticker PRPFX) was established in San Francisco, with Browne described as a co-founder and later consultant. Wikipedia names Terry Coxon and John Chandler as founders. The fund is not a literal 25/25/25/25 copy: its stated six target categories are 35% US dollar bonds, 10% Swiss franc assets, 20% gold, 5% silver, 15% growth stocks and 15% natural-resource stocks. The Family of Funds added a Short-Term Treasury fund in 1987, Aggressive Growth in 1990 and Versatile Bond in 1991. Michael Cuggino took over the main fund in 2003. Assets rose from under $50 million to about $17 billion in 2012 after the strong 2008 result.
Interest in the DIY version revived after 2008. Craig Rowland and J. M. Lawson wrote the book The Permanent Portfolio: Harry Browne's Long-Term Investment Strategy, and the Bogleheads wiki and Portfolio Charts present the 25% x 4 version as the standard form. Browne died of ALS on 1 March 2006.
What is in it
| US stocks (S&P 500 / total market index fund) | 25% | prosperity |
| Long-term US Treasury bonds | 25% | deflation (and prosperity) |
| Gold (bullion coins or bullion-backed ETF) | 25% | inflation |
| Cash / US Treasury bills (or money market) | 25% | tight money / recession |
How we model it
| US large companies (S&P 500) | 25% |
| Long-term government bonds (20+ y) | 25% |
| Gold | 25% |
| Cash (Treasury bills) | 25% |
For a euro investor
How to build it with European funds
| Part | Share | Example funds (ISIN) |
|---|---|---|
| US large companies (S&P 500) | 25% | iShares Core S&P 500 UCITS ETF USD (Acc) IE00B5BMR087Vanguard S&P 500 UCITS ETF (USD) Distributing IE00B3XXRP09 |
| Long-term government bonds (20+ y) | 25% | iShares USD Treasury Bond 20+yr UCITS ETF USD (Dist) IE00BSKRJZ44 |
| Gold | 25% | Invesco Physical Gold ETC IE00B579F325Xetra-Gold DE000A0S9GB0 |
| Cash (Treasury bills) | 25% | Xtrackers II EUR Overnight Rate Swap UCITS ETF 1C LU0290358497iShares USD Treasury Bond 0-1yr UCITS ETF (Acc) IE00BGSF1X88 |
The idea
Nobody can forecast the economy, so hold one asset suited to each of four conditions and let each carry the portfolio when its condition arrives. Portfolio Charts describes it as risk-parity thinking applied to economic conditions rather than to volatility.
How people buy it
Total-market or S&P 500 index fund (e.g. VTI), long Treasury fund or ETF (e.g. VGLT, TLT), physical gold or a gold ETF (GLD, IAU), T-bills or money market. The Permanent Portfolio Fund (PRPFX) is a managed fund with a different, more complex target mix.
Rebalancing as published
Fail-Safe Investing (via Wikipedia) says rebalance once a year back to 25%. Some secondary sources describe a band rule (act when a sleeve is above 35% or below 15%), but I could not confirm the wording in Browne's text.
Variants
- Fund version (PRPFX): 35% dollar bonds, 10% Swiss franc, 20% gold, 5% silver, 15% growth stocks, 15% natural-resource stocks (Wikipedia, Permanent Portfolio Family of Funds).
- Short-term Treasuries instead of T-bills, with similar results per Portfolio Charts.
- Early-1980s Browne/Coxon form (Inflation-Proofing Your Investments) was broader, with natural-resource holdings; exact weights not confirmed.
Criticism
- Critics doubt it can beat the S&P 500 in a long period of rising interest rates, and the fund trailed the S&P 500 over 1982-2010 (Wikipedia).
- One reviewer called Fail-Safe Investing long on theory and short on practical detail (Wikipedia).
- Half the portfolio (gold and cash) has little long-run real return in many eras; returns depend on interest rates and the gold price.
- The fund charges 0.71% to 0.78% a year and is actively managed (Wikipedia); the DIY version avoids this.
- Mutiny Fund notes that reliable multi-asset data starts only around 1973, so one investing lifetime is a thin sample.
Through the eras
| Era | Dates | Total | Per year | Worst drop | S&P 500 |
|---|---|---|---|---|---|
| The Great Inflation (stagflation) | 1969-01 – 1982-07 | +251.1 % | +9.7 % | −11.7 % | +84.6 % |
| 1973-74 oil shock and bear market | 1973-01 – 1974-12 | +27.1 % | +12.7 % | −9.8 % | −41.7 % |
| Second oil shock and the Volcker disinflation | 1979-01 – 1982-08 | +59.3 % | +13.5 % | −11.7 % | +59.2 % |
| Great bull market in stocks and bonds | 1982-08 – 1999-12 | +393.3 % | +9.6 % | −7.7 % | +2060.4 % |
| Black Monday | 1987-08 – 1987-12 | −2.8 % | — | −7.7 % | −21.8 % |
| Savings-and-loan crisis and 1990 recession | 1990-07 – 1991-03 | +6.3 % | — | −2.7 % | +7.4 % |
| 1994 bond market massacre | 1994-02 – 1994-12 | −3.0 % | — | −4.6 % | −3.2 % |
| Asian and Russian financial crises | 1997-07 – 1998-10 | +11.8 % | +8.8 % | −4.0 % | +22.4 % |
| Dot-com bubble and crash | 2000-03 – 2002-10 | +1.5 % | +0.6 % | −6.0 % | −37.2 % |
| Recovery and housing boom | 2002-11 – 2007-09 | +64.9 % | +10.7 % | −4.5 % | +97.0 % |
| Global financial crisis | 2007-10 – 2009-03 | +1.1 % | +0.7 % | −12.2 % | −44.7 % |
| The decade after the crisis | 2009-04 – 2019-12 | +109.6 % | +7.1 % | −6.8 % | +411.2 % |
| Fourth-quarter 2018 sell-off | 2018-09 – 2018-12 | −1.9 % | — | −3.0 % | −14.4 % |
| Covid crash and stimulus boom | 2020-02 – 2021-12 | +17.4 % | +8.7 % | −4.6 % | +53.6 % |
| Inflation shock and rate hikes | 2022-01 – 2022-12 | −12.3 % | −12.3 % | −15.8 % | −19.9 % |
Calendar years
Any N-year period
| Any N-year period | Worst | 10 % worse than | Median | 10 % better than | Best |
|---|---|---|---|---|---|
| 1 y (691) | −14.6 % | −1.3 % | +8.5 % | +18.4 % | +48.1 % |
| 3 y (667) | −1.4 % | +3.5 % | +8.1 % | +14.6 % | +22.5 % |
| 5 y (643) | +2.7 % | +4.8 % | +8.3 % | +12.8 % | +17.1 % |
| 10 y (583) | +3.4 % | +6.0 % | +7.9 % | +12.3 % | +15.1 % |
| 15 y (523) | +5.1 % | +6.5 % | +7.6 % | +11.2 % | +12.9 % |
| 20 y (463) | +6.1 % | +6.7 % | +7.7 % | +10.6 % | +11.8 % |
| 30 y (343) | +6.3 % | +6.9 % | +8.1 % | +9.7 % | +10.5 % |
How it behaved in history
- 1970s stagflation. Context behind the design. Mutiny Fund reports real S&P 500 down about 64% from 1968 to 1982 and a 60/40 portfolio roughly flat in real terms for two decades, while gold-type assets did well. This is a statement about the stock/bond mix, not a published Permanent Portfolio result. mutinyfund.com
- 1990s bull market. The Permanent Portfolio Fund trailed most U.S. stock funds in the 1990s. en.wikipedia.org
- 2008 crisis. The fund lost about 8% while the S&P 500 lost 37%; assets under management then grew sharply to about $17 billion by 2012. en.wikipedia.org
Published results (by others)
- Real return and risk of 25% stocks / long Treasuries / T-bills / gold, US investor (1970-2025): about 5.1% average real annual return, volatility about 7.6%, deepest real drawdown about 19%, longest time below a prior high about 5 years, 30-year safe withdrawal rate about 5.5% portfoliocharts.com
- Equal stocks/bonds/gold/cash portfolio, backtest by Mutiny Fund (1973-2022): return 6.18%, volatility 6.95%, maximum drawdown -15.09% (their own data, nominal) mutinyfund.com
- Permanent Portfolio Fund vs S&P 500 in 2008 (2008): fund -8% vs S&P 500 -37% en.wikipedia.org
- Permanent Portfolio Fund vs S&P 500 average annual return (1982-2010): 6.5% vs 10.6% en.wikipedia.org
- Same, 2001-2011 (2001-2011): fund 11% a year vs 1.6% for the S&P 500 en.wikipedia.org
What we could not verify
- Browne's earlier books (How You Can Profit from the Coming Devaluation, 1970; You Can Profit from a Monetary Crisis, 1974) are known to me but I did not get a source in this session, so no dates are asserted in origin.
- Exact wording and numbers of Browne's rebalancing rule (15%/35% bands) not confirmed from a primary text.
- Which people formally founded the 1982 fund differs between sources (Wikipedia: Coxon and Chandler; fund history page: Browne a founder).
- Fail-Safe Investing publication year: Wikipedia text says September 1999 but its category says 1998.
Sources
- en.wikipedia.org
https://en.wikipedia.org/wiki/Fail-Safe_Investing - en.wikipedia.org
https://en.wikipedia.org/wiki/Permanent_Portfolio_Family_of_Funds - en.wikipedia.org
https://en.wikipedia.org/wiki/Harry_Browne - www.permanentportfoliofunds.com
https://www.permanentportfoliofunds.com/history.html - portfoliocharts.com
https://portfoliocharts.com/portfolio/permanent-portfolio/ - mutinyfund.com
https://mutinyfund.com/permanent-portfolio/ - www.bogleheads.org
https://www.bogleheads.org/wiki/Lazy_portfolios - www.whitecoatinvestor.com
https://www.whitecoatinvestor.com/150-portfolios-better-than-yours/
Calculated on historical data. Past results do not predict the future. Models before the 1990s use stand-ins for classes that had no index yet; fees, taxes and fund costs are not included. This is mathematics, not an investment recommendation.