Harry Browne’s Permanent Portfolio
Harry Browne's Permanent Portfolio holds a quarter each in US stocks, long-term Treasuries, gold, and Treasury bills, one asset for each economic condition: prosperity, deflation, inflation, and recession. It is reviewed once a year and rebalanced only when a holding has drifted below 15% or above 35% of the portfolio.
Designed by Harry Browne, 1999. Implemented and tracked by Tactfolio.
| Jan 2007 – Sep 2026 | Strategy | SPY |
|---|---|---|
| Annual return (CAGR) | 6.3% | 11.0% |
| Worst drawdown | -18.5% | -55.2% |
| Sharpe ratio | 0.82 | 0.63 |
| Volatility | 7.8% | 19.6% |
| Annual return since publication (Jan 2007) | 6.3% | 11.0% |
| Apr 1968 – Sep 2026 | Strategy | SPY |
|---|---|---|
| Annual return (CAGR) | 8.8% | 10.8% |
| Worst drawdown | -20.3% | -55.2% |
| Sharpe ratio | 1.14 | 0.69 |
| Volatility | 7.7% | 17.1% |
| Annual return since publication (Feb 1999) | 7.2% | 8.6% |
The Permanent Portfolio is Harry Browne's all-season allocation, described in its best-known form in his 1999 book Fail-Safe Investing; he and Terry Coxon first introduced a permanent portfolio in 1981. It holds a quarter each in stocks, long-term Treasuries, gold, and Treasury bills, and is rebalanced only when one of them drifts far from 25%.
The idea#
Browne believed that nobody, including professional forecasters, can reliably say what the economy will do next. So rather than predict, he built a portfolio for four conditions. Stocks do well in prosperity. Long-term Treasuries do well in deflation, when interest rates fall. Gold does well in inflation. Cash, in Treasury bills, holds its value in a recession or a credit squeeze.
Apart from cash, each asset is volatile on its own. But because they respond to different conditions, their gains and losses tend to offset one another, and the whole portfolio moves far less than any part of it. The name reflects the intent: set it up once and leave it alone.
How it works#
- Hold 25% in US stocks (VTI), 25% in long-term Treasuries (TLT), 25% in gold (GLD), and 25% in short-term Treasuries as cash (SHV).
- At the close of the last trading day of each year, check the weights. If any holding has fallen below 15% or risen above 35% of the portfolio, reset all four to 25%. Otherwise leave it alone.
Browne specified 30-year Treasury bonds and Treasury bills or a Treasury money market fund; TLT and SHV are the closest widely traded funds.
What the backtest shows#
Over the ETF era, from January 2007, the Permanent Portfolio returned about 6% a year, well below the S&P 500's 11% and a 60/40 portfolio's 8%. It was also far steadier: its volatility was well under half the S&P 500's, its worst drawdown was about 19%, and its risk-adjusted return beat both the S&P 500 and the 60/40.
It worked as designed in 2008, gaining about 1% while the S&P 500 lost 37%. Its weak years came when gold fell: in 2013 it lost 7% while the S&P 500 rose 32%. Gold also drove its best year of the ETF era, 2025, when it gained 22%, more than the S&P 500. Its worst drawdown came in 2022, when rising rates hit long Treasuries and stocks at once, running from November 2021 to October 2022; it recovered in March 2024.
With simulated history the test starts in 1968 and returns near 9% a year with a risk-adjusted return well above the S&P 500's. The 1970s show its purpose: it gained in 1973 and 1974 while stocks fell hard, and gained over 50% in 1979 as gold soared. Its deepest simulated drawdown, about 20%, came in early 1980, when gold fell from its peak; it was recovered within the year.
When it struggles#
- Falling gold. A quarter of the portfolio is gold, which can lose value for years, as it did after 2011.
- Rising rates. Long Treasuries and stocks can fall together, as in 2022.
- Strong stock markets. With only a quarter in stocks, it trails badly in bull markets.
Using it on Tactfolio#
The live strategy above holds these four ETFs and applies Browne's 15%/35% bands at each year end. Copy it to try a plain yearly rebalance, a longer bond fund, or compare it with the Golden Butterfly, which adds small-cap value stocks, and the All Weather Portfolio.
Year by year
| Year | Strategy | SPY |
|---|---|---|
| 2026* | 2.3% | 14.0% |
| 2025 | 22.3% | 17.7% |
| 2024 | 15.0% | 24.9% |
| 2023 | 12.9% | 26.2% |
| 2022 | -13.4% | -18.2% |
| 2021 | 4.4% | 28.7% |
| 2020 | 16.2% | 18.3% |
| 2019 | 18.6% | 31.2% |
| 2018 | -2.4% | -4.6% |
| 2017 | 12.3% | 21.7% |
| 2016 | 6.0% | 12.0% |
| 2015 | -2.9% | 1.2% |
| 2014 | 10.0% | 13.5% |
| 2013 | -6.9% | 32.3% |
| 2012 | 5.9% | 16.0% |
| 2011 | 11.6% | 1.9% |
| 2010 | 14.8% | 15.1% |
| 2009 | 3.5% | 26.4% |
| 2008 | 1.2% | -36.8% |
| 2007* | -0.1% | 4.8% |
| Year | Strategy | SPY |
|---|---|---|
| 2026* | 2.3% | 14.0% |
| 2025 | 22.3% | 17.7% |
| 2024 | 13.8% | 24.9% |
| 2023 | 11.6% | 26.2% |
| 2022 | -12.7% | -18.2% |
| 2021 | 6.6% | 28.7% |
| 2020 | 17.4% | 18.3% |
| 2019 | 17.4% | 31.2% |
| 2018 | -2.1% | -4.6% |
| 2017 | 11.5% | 21.7% |
| 2016 | 5.5% | 12.0% |
| 2015 | -2.8% | 1.2% |
| 2014 | 9.4% | 13.5% |
| 2013 | -1.6% | 32.3% |
| 2012 | 7.3% | 16.0% |
| 2011 | 9.2% | 1.9% |
| 2010 | 15.3% | 15.1% |
| 2009 | 7.8% | 26.4% |
| 2008 | -1.6% | -36.8% |
| 2007 | 14.0% | 5.1% |
| 2006 | 12.0% | 15.8% |
| 2005 | 9.1% | 4.8% |
| 2004 | 7.2% | 10.7% |
| 2003 | 13.3% | 28.2% |
| 2002 | 6.8% | -21.6% |
| 2001 | -0.3% | -11.8% |
| 2000 | 2.9% | -9.7% |
| 1999 | 6.2% | 20.4% |
| 1998 | 12.8% | 28.7% |
| 1997 | 8.2% | 33.5% |
| 1996 | 6.5% | 22.5% |
| 1995 | 21.5% | 38.0% |
| 1994 | -2.7% | 0.4% |
| 1993 | 12.7% | 9.7% |
| 1992 | 4.3% | 7.6% |
| 1991 | 12.3% | 30.3% |
| 1990 | 0.9% | -3.2% |
| 1989 | 16.4% | 31.5% |
| 1988 | 5.8% | 16.4% |
| 1987 | 3.4% | 5.1% |
| 1986 | 19.1% | 18.6% |
| 1985 | 21.3% | 31.6% |
| 1984 | 2.5% | 6.2% |
| 1983 | 6.0% | 22.4% |
| 1982 | 22.6% | 21.6% |
| 1981 | -5.8% | -4.9% |
| 1980 | 13.9% | 32.4% |
| 1979 | 51.1% | 18.3% |
| 1978 | 14.0% | 6.5% |
| 1977 | 5.9% | -7.2% |
| 1976 | 14.1% | 23.8% |
| 1975 | 6.6% | 37.1% |
| 1974 | 12.1% | -26.5% |
| 1973 | 16.5% | -14.7% |
| 1972 | 17.9% | 18.9% |
| 1971 | 11.9% | 14.1% |
| 1970 | 6.7% | 3.9% |
| 1969 | -6.4% | -8.4% |
| 1968* | -0.1% | 14.6% |
* Partial year.
The rules as implemented
This is the exact tree Tactfolio runs, rebalanced yearly with signals and trades at the close. Open it to inspect or copy it.
- StrategyBrowne Permanent Portfolio
- WeightSpecified
- TickerVTI25%
- TickerTLT25%
- TickerGLD25%
- TickerSHV25%
- WeightSpecified
Sources and caveats
- Harry Browne, Fail-Safe Investing (1999); the permanent portfolio idea first appeared in Inflation-Proofing Your Investments (1981, with Terry Coxon)
- Portfolio Charts, Permanent Portfolio
- Optimized Portfolio, Harry Browne's Permanent Portfolio (the 15%/35% rebalancing bands)
- ETFs stand in for Browne's holdings: VTI for a broad US stock fund, TLT (20+ year) for his 30-year Treasury bonds, GLD for gold bullion or coins, and SHV (short Treasuries) for Treasury bills or a Treasury money market fund.
- Browne's bands are modeled as a drift corridor of 10 percentage points around each 25% stake, checked once a year; a breach restores all four to 25%.
- Rebalancing happens at the close of the last trading day of each year.
Common questions#
What is Harry Browne's Permanent Portfolio?#
It is an equal split between stocks, long-term Treasuries, gold, and cash, one asset for each of prosperity, deflation, inflation, and recession. Browne designed it to protect savings in any economic environment without forecasting.
What ETFs are used for the Permanent Portfolio?#
This version uses VTI for stocks, TLT for long-term Treasuries, GLD for gold, and SHV for cash. Many investors use similar funds, such as an S&P 500 fund for stocks or a Treasury bill fund for cash.
How often do you rebalance the Permanent Portfolio?#
Browne suggested reviewing it once a year and rebalancing only when a holding is below 15% or above 35% of the portfolio. That rule keeps trading rare.
Does the Permanent Portfolio still work?#
Since 2007 it has returned about 6% a year with a worst drawdown under 20%, less return than a 60/40 portfolio but with a better risk-adjusted return. The live record on Tactfolio shows how it is doing now.