The permanent allocation is
Courtesy of our in-house analysis, there are subtle differences in the assets we have chosen to represent each asset class versus those in Antonacci’s original strategy. Also, our momentum score uses shorter look-back period than the 12 months stipulated by the original strategy. This leads to earlier signals with a higher trading frequency, slightly better returns and still similar volatility.
At the close on the last trading day of the month, calculate the momentum score for each of the eight asset classes.
Allocate 25% of the portfolio to each module. For each module, choose the asset with the highest momentum score (relative or cross-sectional momentum). If that asset’s momentum score exceeds the US Federal Funds Rate (absolute momentum), go long that asset at the close; otherwise move to cash.
Harry Browne’s portfolio is built on the premise that the economy fluctuates between four conditions. The portfolio is split evenly among four assets, each of which is meant to capitalise on one of those conditions: equities during periods of prosperity, cash during recession, gold during inflation, and credits during deflation.
Our approach is tilting the portfolio more towards prosperity. The problem is that the original Permanent Portfolio can be too light on risk during periods of growth, causing it to underperform badly. Real estate is a good antidote for that. As with equities, real estate is always positive and growing in the long-term. Also, with its large exposure to long-term US Treasuries, the Permanent Portfolio will likely face the strongest headwinds during an extended period of rising interest rates. Using intermediate-term US Treasuries combined with intermediate corporate bonds somewhat alleviates this risk.
The equally weighted four asset classes to protect and grow the portfolio, no matter what happens in the market, and the resulting performance has proven to be one of the most consistent with dependable returns and low drawdowns.
Gold is having a tendency towards long multi-decade periods of flat/negative returns. However, its efficacy as a hedge against inflation and the USD are welcome benefits as an uncorrelated return stream.
The Static Asset Allocation builds the foundation of all our model portfolios. Consistent returns and low risks allow us to combine this buy-and-hold strategy with more aggressive momentum strategies.
More Resistant To Market Stress
Balanced for Risks and Opportunities
Exposure To Market Opportunities
fundalytix is not a trading platform or robo-advisor. fundalytix is somewhere in the middle in the best way possible. fundalytix is a small investment boutique with automated investing with a high level of customisation for its clients. Once we build your portfolio, our platform does the rest. This approach keeps cost down which results in higher growth and net returns.
