Update: Harry Browne Permanent Portfolio August 2018
Rules-Based Strategy Update: Harry Browne Permanent Portfolio
The Harry Browne Permanent Portfolio is a classic buy and hold system that allocates investor capital into four asset classes. Each of these four asset classes are intended to do well during a specific economic cycle: inflation, deflation, growth, and recession.
Since not all of these economic cycles will occur at the same time, Harry Browne argued that by holding all of them you get solid diversification with good capital protection. The system holds 25% in each of the following assets: a world stock market ETF, and total bond market ETF, a gold ETF, and a treasury bond ETF.
It will be a good gauge to determine if the more active strategies will perform better than a simple buy and hold.
You can continue to see the progress results of this system by subscribing to the Robotic Investing newsletter. I will email you whenever a new post goes live, including all of the strategy updates I track on the site.
Harry Browne Permanent Portfolio Rules-Based Investing
Since this is a buy and hold portfolio, there is very little active trading. Instead, the initial portfolio is opened, and then the only thing to do is annual rebalancing. Here are the rules of the strategy:
- Segment portfolio into 25% segments
- Purchase each of the four ETFs:
- VT – Vanguard Total World Stock ETF
- BND – Vanguard Total Bond Market ETF
- IAU: iShares Gold Trust ETF
- SHY: iShares 1-3 Year Treasury Bond ETF
- Rebalance annually
This is a very conservative strategy. I look forward to seeing how it performs over the years.
Monthly Signals: Harry Browne Permanent Portfolio
There are no signals required for the Harry Browne Permanent Portfolio. Simply buy and hold each of the four ETFs.
Each month I generate the signals for the portfolio using TC2000. If you want to give TC2000 a try in order to generate the signals for the strategies on Robotic Investing, then use this link for $25 off.
There is no change for August 2018 – the system continues to hold VT, BND, IAU, and SHY.
Using the chart in TC2000, I did a relative analysis on each of the four holding to see how they have compared to each other over the past 12 months. As you can see it has been a tough year for the performance of each of the fund – no surprise given the strong performance of equities.
Strategy Tracking & Performance: Harry Browne Permanent Portfolio
Here is the portfolio tracker and performance chart for the Harry Browne Permanent Portfolio. The Morningstar Portfolio Tracker is used to track all the systems at Robotic Investing. As you can see the strategy is struggling compared to the S&P 500. Portfolios like this will often lag the market when equities are on a strong bull run.
Each of the portfolios tracked use a hypothetical $50,000 starting value. This portfolio was started on July 2nd, 2018.
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