Tactical Permanent Portfolio
The Tactical Permanent Portfolio applies a trend-following overlay to the classic Permanent Portfolio structure originally designed by Harry Browne. Browne's original Permanent Portfolio holds equal 25% allocations to stocks, long-term bonds, gold, and cash — a static allocation designed to perform adequately in any economic environment. The tactical version retains this four-quadrant framework but adds a mechanism to move each asset class to cash when it falls below a long-term trend line, aiming to reduce drawdowns while preserving the all-weather diversification that makes the Permanent Portfolio attractive.
Investment Philosophy
The tactical version is built on the premise that the Permanent Portfolio's equal-weighted static structure leaves it unnecessarily exposed to the worst periods for each asset class. By applying a simple moving average or momentum filter to each of the four components, the strategy attempts to step aside when any given asset is in a sustained downtrend — moving that portion of the portfolio to cash or short-term treasuries — while maintaining the core all-weather diversification logic. The approach combines Harry Browne's regime-agnostic philosophy with Meb Faber's trend-following methodology.
Who It's For
This portfolio suits investors who are attracted to the Permanent Portfolio's stability and all-weather design but want a systematic mechanism to reduce exposure during prolonged drawdowns in any of the four asset classes. It requires comfort with a rules-based, tactical approach and monthly monitoring.
Pros
- Retains the all-weather diversification of the original Permanent Portfolio
- Trend-following overlay aims to reduce exposure during sustained drawdowns in individual asset classes
- Systematic and rules-based, avoiding emotional decision-making
Cons
- Adds complexity and turnover compared to the simple, static original Permanent Portfolio
- Trend signals can produce whipsaw losses in oscillating markets
- The protective value of the tactical overlay depends on the reliability of trends in each asset class, which is not guaranteed
Technical Notes
The tactical overlay is typically applied individually to each of the four asset classes, evaluated monthly against a 10-month or 200-day moving average.
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Average Allocation
Based on historical average weights across all rebalance periods.
Performance Snapshot
Rolling Returns
| Period | Low | Average | High |
|---|---|---|---|
| 1 Year | -7.6% | +8.8% | +34.2% |
| 3 Year | +0.4% | +8.3% | +22.1% |
| 5 Year | +2.4% | +8.4% | +18.8% |
| 10 Year | +3.7% | +8.6% | +13.9% |
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.