How does the All Weather portfolio work?

A portfolio designed by Ray Dalio's Bridgewater to perform reasonably in any economy. A common do-it-yourself version holds 30% US stocks, 40% long-term Treasuries, 15% intermediate Treasuries, 7.5% gold, and 7.5% commodities, rebalanced yearly.

Is the All Weather portfolio good for retirement?

Its appeal for retirees is smaller, shorter losses, which lowers the risk of being forced to sell in a downturn. The trade-off is lower expected growth, so it suits investors who value stability over maximum returns.

Why does All Weather hold so many bonds?

Because bonds move less than stocks, you need more of them for their risk to matter as much as the stock risk. The large bond weight is about balancing risk, not dollars.

How is All Weather different from a 60/40 portfolio?

A 60/40 holds only stocks and bonds. All Weather adds gold and commodities and shifts far more into bonds, aiming to cover inflation and different growth regimes that a 60/40 leaves exposed.

Ray Dalio's All Weather portfolio, tested against 25 years of markets

By Jeffrey Lin · Published 2026-08-29 · Updated 2026-08-29

Most portfolios are quietly a bet that good times will keep rolling. Ray Dalio's All Weather is built on the opposite instinct — that you cannot know what the economy will do next, so you should own something that thrives in each possibility. That is why it leans so heavily on bonds and folds in gold and commodities alongside stocks, balancing risk across four economic environments rather than chasing the highest return.

From Sep 2000 to Jul 2026, a yearly-rebalanced All Weather portfolio returned 6.5% per year with a maximum drawdown of -21.5% — versus 8.8% and -50.8% for S&P 500 (SPY) alone. It gave up some return for materially lower risk, producing a higher Sharpe ratio (0.84 vs 0.64). $10,000 grew to $49,093 (vs $83,976 in the S&P 500).

What's in it: the allocation

VTI30%
TLT40%
IEF15%
GLD7.5%
DBC7.5%

Growth of $10,000

Growth of a $10,000 investment, Sep 2000–Jul 2026. The All Weather line rises more slowly than the S&P 500 but with visibly shallower dips — the trade-off the strategy is designed to make.

What an investor actually experiences: drawdowns

Decline from the prior peak — the "underwater" curve.

All Weather is built to avoid deep holes, and the record shows it: its worst decline was -21.5%, less than half the S&P 500's -50.8%. Even so, it spent as long as 43 months underwater — a reminder that 'all weather' does not mean 'no bad weather'. Much of that stretch was 2022, when rising interest rates punished its large bond and long-Treasury holdings at the same time stocks fell.

Still, a -21.5% dip is the kind of loss most investors can sit through without abandoning the plan. If you were saving for a house or nearing retirement, that shallower fall makes it far less likely you would have been forced to sell near the bottom.

Results

Statistic	S&P 500 (SPY)	All Weather
CAGR	8.8%	6.5%
Annualized volatility	15.0%	7.9%
Sharpe ratio	0.64	0.84
Sortino ratio	0.96	1.33
Max drawdown	-50.8%	-21.5%
Longest drawdown (months)	52	43
Growth of $10,000	$83,976	$49,093

The portfolio grew at 6.5% a year, turning $10,000 into $49,093 over about 25 years — well behind the S&P 500's $83,976. That is the cost of holding so much in bonds, gold, and commodities instead of stocks.

What you buy with that lower growth is a dramatically smoother ride: volatility of just 7.9% versus 15.0%, and a Sharpe ratio of 0.84 against the S&P's 0.64 (Sortino 1.33 vs 0.96). On a risk-adjusted basis All Weather clearly won this period — more return for every unit of risk. Whether that is the right trade comes down to whether you value a calm ride over maximum growth.

Figures are computed from monthly adjusted closing prices over Sep 2000–Jul 2026. Drawdowns are measured at month-end and so understate intra-month extremes.

Methodology

The two instruments

VTI — Vanguard Total Stock Market ETF: Owns essentially every US stock — the growth engine of the portfolio.
TLT — iShares 20+ Year Treasury Bond ETF: Long-term US government bonds. They tend to rise sharply when growth or inflation falls, offsetting stock losses — but are very sensitive to interest rates.
IEF — iShares 7-10 Year Treasury Bond ETF: Intermediate US government bonds — a steadier, less rate-sensitive complement to the long bonds.
GLD — SPDR Gold Shares: Physical gold, which historically holds value during inflation shocks and currency stress when both stocks and bonds can struggle.
DBC — Invesco DB Commodity Index Tracking Fund: A basket of commodities (energy, metals, agriculture) that tends to rise with inflation — a diversifier stocks and bonds lack.

Backtest parameters

Allocation: 30% VTI / 40% TLT / 15% IEF / 7.5% GLD / 7.5% DBC
Benchmark: S&P 500 (SPY)
Data: Monthly adjusted closing prices (dividends reinvested)
Period: Sep 2000 – Jul 2026 (history before an ETF's inception is extended with its older index/mutual-fund equivalent)
Rebalance: Yearly, at month-end
Transaction costs: None modelled

Advantages

Built for every environment: By holding assets that respond to different economic conditions, the portfolio rarely has everything falling at once. Historically that has produced much smaller and shorter declines than an all-stock portfolio.
Risk is balanced, not just dollars: Because bonds move less than stocks, the heavy bond allocation is what makes each economic risk carry roughly comparable weight — the core idea behind 'risk parity'.
Genuine diversifiers: Adding gold and commodities brings in assets that can rise precisely when stocks and bonds both fall, such as inflation shocks — something a plain stocks-and-bonds mix cannot do.

Disadvantages and risks

Lower long-run growth: The safety comes at a cost: with only 30% in stocks, the portfolio has historically grown more slowly than a stock-heavy one over long bull markets.
Heavy reliance on long bonds: The 40% in long-term Treasuries is a bet that bonds keep cushioning stocks. In 2022, rising rates hit both stocks and long bonds together, and this portfolio fell more than its 'all weather' name suggests.
Commodities are volatile and can bleed: Broad commodities can go long stretches losing value between inflation spikes, acting as insurance you pay for even in calm periods.

Try it yourself

Every number on this page is reproduced by MarketHeist's free portfolio tool — change the weights, tickers, or rebalancing and watch the result update.

Open the All Weather portfolio in the live tool →

Frequently asked questions

How does the All Weather portfolio work?: A portfolio designed by Ray Dalio's Bridgewater to perform reasonably in any economy. A common do-it-yourself version holds 30% US stocks, 40% long-term Treasuries, 15% intermediate Treasuries, 7.5% gold, and 7.5% commodities, rebalanced yearly.
Is the All Weather portfolio good for retirement?: Its appeal for retirees is smaller, shorter losses, which lowers the risk of being forced to sell in a downturn. The trade-off is lower expected growth, so it suits investors who value stability over maximum returns.
Why does All Weather hold so many bonds?: Because bonds move less than stocks, you need more of them for their risk to matter as much as the stock risk. The large bond weight is about balancing risk, not dollars.
How is All Weather different from a 60/40 portfolio?: A 60/40 holds only stocks and bonds. All Weather adds gold and commodities and shifts far more into bonds, aiming to cover inflation and different growth regimes that a 60/40 leaves exposed.

References

Educational analysis of historical data, not investment advice. Past performance does not guarantee future results. Backtested results are hypothetical and computed from the MarketHeist portfolio engine on the parameters above.