The Dalio

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This is a portfolio loosely based on the world-renowned investor Ray Dalio and his “all-weather” approach to asset allocation.


Ray Dalio is famous for what he coined the “holy grail” of investing, which refers to the role of non-correlation in reducing risk per unit of return.


Dalio and his hedge fund, Bridgewater Capital, found that holding just 15-20 non-correlated assets meaningfully diversifies one’s portfolio more than holding 1,000 assets that are, say, 60% correlated. 


In other words, non-correlation is much more important to a portfolio's diversification than the number of investments.


Consistent with this finding, this model portfolio aims to evenly diversify exposure across the most non-correlated asset classes. 


In doing so, portfolio drawdown and volatility should be reduced relative to the overall market (as measured by a standard U.S. stock index like the S&P500) while achieving similar returns.


It should be noted, however, non-correlation is not a sufficient condition for generating alpha or even matching benchmark returns.


Finding *quality* investments is still paramount.


But with those 15-20 *quality* investments that have little correlation to one another, a portfolio can significantly reduce its risk while roughly matching the long-term returns of a benchmark index.


Asset Allocations:


  1. Gold
  2. Bitcoin
  3. U.S. Treasuries
  4. U.S. Large Caps
  5. U.S. Defensive (Utilities, Staples, Healthcare)
  6. U.S. Micro Caps
  7. Actively-Managed Fund
  8. Energy Companies
  9. Commodities (Non-Energy)
  10. International Bonds
  11. International Equities
  12. Currencies (EUR/USD, GBP/JPY, etc.)
  13. Real Estate
  14. Art
  15. Cash (Liquidity)



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*All portfolio allocations illustrated or discussed, whether depicting asset classifications, categories, subcategories, or any specific asset, are for informational and educational purposes only. This is not investment advice.*

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