In one of the previous blogs, we talked about how to construct a permanent portfolio with Ray Dalio’s model which emphasizes a fairly comprehensive mixes of investment assets such as stock, bond, precious metal, and commodity. If one does not want to go with all of these asset mix and use a simple fund to achieve that, one can take a look at mutual fund called permanent portfolio fund. The fund has been established for a long time. Its manager Michael Cuggino has been the lead Manager since April 30, 2003. But It is a fund less about its manager, more about its asset allocation. As the fund name suggests, the fund is trying to create a fund for all seasons and thus a relatively stable mix of assets that does not change a lot over time. Its typical mixes are precious metal, stable currency, stock and income generating asset.
Its performance is less than ideal in the last few years. But to be fair, almost all balanced portfolios tend to lag the market, especially since permanent portfolio has a large allocation to stable currency. According to portfolio visualizer, its Sharp ratio is only 0.44 and Sortino Ratio is 0.67. Based on its mix, it tends to be a better choice during an unstable environment than a bull market. We don’t own this fund now, but will keep an eye on it during the market turbulence.