The Everlasting Portfolio is a technique for diversifying your wealth. It’s an asset allocation that appears prefer it was lifted from the Outdated Testomony:
- 25% in money
- 25% in gold
- 25% in shares
- 25% in long-term authorities bonds
Okay, so that you’re not delivery corn in a Phoenician galley or laying down shekels on the native moneylender. You’re investing in inventory market listed corporations and authorities debt.
Nonetheless, for an asset allocation the Everlasting Portfolio is about as back-to-basics as diversified will get – the 25% slug of gold giving it an particularly Outdated World tang.
The portfolio’s roots lie within the excessive inflation period of the Seventies, when investing was easier. Overlook robotic advisors or quant funds – the one factor most individuals used computer systems for was enjoying Pong or Pac-Man.
Again then individuals nonetheless held energetic funds and shares for many years. They phoned up their stockbroker to do trades – or visited them in-person!
A dark minority even buried gold cash of their backyard or stashed them below floorboards, earlier than hunkering down to attend for the inevitable nuclear battle.
Plus c’est change
Almost 50 years on – it’s a special world. (Nicely, form of…)
You may properly surprise then what the slightly presumptuously named Everlasting Portfolio provides us twenty first Century traders.
Absolutely we’ve nothing to study from an strategy you can write on a fag packet? (If we nonetheless smoked…)
Nicely, I consider it’s value pondering the Everlasting Portfolio, and its misleading simplicity. Whereas it’s too easy for an investing stamp collector like myself, I recognise it as a factor of investing magnificence.
The Everlasting Portfolio’s returns have traditionally been fairly particular, too.
Not the very best returns, granted. However that’s not the one option to choose how properly a portfolio performs.
The historical past of the Everlasting Portfolio
The Everlasting Portfolio was the brainchild of Harry Browne, a US author and politician.
Browne’s life was fairly a journey – he wrote a traditional of the US libertarian motion and ran for president – but it surely’s his evolution as an investor that’s related to us.
Starting his investing profession as a gold bug and publication author, Browne morphed right into a proto-passive investor. He got here to consider no person knew a lot in regards to the path of markets or the economic system.
Expansions and recessions have been inevitable however inconceivable to time. Traders needs to be scared of inflation in addition to deflation, and likewise of presidency interventions.
Low-cost index trackers have been the investments of alternative. Why pay a fund supervisor when no person is aware of something?
This all resulted within the Everlasting Portfolio – the pioneering all-weather asset allocation I outlined above.
The science bit
The Everlasting Portfolio is very simple, however designed to protect an investor’s wealth no matter fortune throws at it:
- In good instances, the equities ought to do properly.
- In retrenchments, long-term authorities bonds ought to shine.
- Gold protects you from calamities – in addition to, hopefully, the form of stagflation that prevailed within the Seventies.
- And money, properly it by no means hurts to have a provide of the folding stuff to name upon.
Rebalance yearly and also you may profit from robotically promoting excessive and shopping for low. Extra importantly, you retain your ship on an excellent keel.
Historic returns from the Everlasting Portfolio
Right here’s how a Everlasting Portfolio, denominated in GBP, would have carried out from 1970 in opposition to World equities and the 60/40 portfolio:
Everlasting Portfolio = World equities, lengthy gilts, UK cash market, and gold priced in GBP. 60/40 portfolio = 60% World equities GBP / 40% medium gilts – as much as 10-year maturities. Charges should not included. Information from Alan Stocker, British Authorities Securities Database, A Millennium of Macroeconomic Information for the UK, The London Bullion Market Affiliation, FTSE Russell, and MSCI. November 2025
Observe: All returns on this submit are inflation-adjusted GBP whole returns.
Right here’s the development strains within the graph damaged down into their threat and reward parts:
| Portfolio | Annualised return (%) | Volatility (%) | Sharpe ratio |
| Everlasting | 4.2 | 6.8 | 0.62 |
| 60/40 | 4.1 | 9.3 | 0.44 |
| 100% equities | 5 | 14.7 | 0.34 |
What’s most noteworthy in regards to the Everlasting Portfolio is its very low volatility:
- The typical 4.2% return from the Everlasting Portfolio got here with a regular deviation of simply 6.8%. That’s calm.
- In contrast, a 60/40 portfolio (World equities / medium gilts) delivered a 4.1% return and it ladled on extra volatility – a regular deviation of 9.3%.
- 100% equities provided the very best returns of all however upped the danger quotient but once more, subjecting homeowners to 14.7% annualised volatility.
Let’s now draft within the Sharpe ratio to assist us make sense of that threat versus reward trade-off.
Danger rewarded
The upper your Sharpe ratio, the higher your risk-adjusted returns. In different phrases, the extra return you get per unit of threat, as measured by volatility.
On that rating, the Everlasting Portfolio’s 4.2% common return is achieved with far much less grief than the opposite two portfolios dished out.
An allocation of 100% equities could provide the prospect of upper returns. However they’ll seemingly include far more drama connected.
In the meantime, you’ll be able to see the Everlasting Portfolio’s regular strategy at work within the progress chart above. Its inexperienced line waggles, for positive. Nevertheless it doesn’t characteristic the sickening cliff-drops that punctuate the 100% equities’ blue line and even the concave wilderness years that afflict the 60/40 portfolio (orange line).
Draw back safety
The Everlasting Portfolio’s relative chill makes it notably well-suited to retirees and people derisking their portfolios earlier than retirement.
Traders targeted on wealth preservation have to keep away from devastating losses. That’s precisely what Browne’s asset combine is designed to keep away from:
The Everlasting Portfolio has solely suffered one bear market drawdown higher than 20% previously 55 years. Examine that with the free falls skilled by extra standard load-outs:
The Everlasting Portfolio’s extraordinarily low 25% equities holding reduces the severity of dips when the inventory market crashes.
Nicer nightmares
Even the nightmare situations are usually much less terrifying:
| Portfolio | Deepest drawdown (%) | Longest drawdown |
| Everlasting | -21.5 | 6 years, 6 months |
| 60/40 | -45.8 | 11 years, 11 months |
| 100% equities | -56.1 | 13 years, 9 months |
In inflation-adjusted phrases, a 60/40 portfolio misplaced practically half its worth throughout its most abysmal run. 60/40 traders additionally needed to endure virtually 12 years underwater within the worst case earlier than their portfolio reclaimed its outdated highs.
In distinction, at worst the Everlasting Portfolio declined lower than halve the quantity of the 60/40. And its longest bear market restoration time was 45% faster.
Because the desk reveals, working with 100% equities was hairier nonetheless when the brown stuff hit the fan.
Take a stroll on the delicate facet
One of many dilemmas dealing with traders – whether or not we recognise it or not – is that long-term common returns conceal some colossal landmines. Monumental blow-ups that may wreak havoc together with your plans.
This is called ‘tail threat’ and you’ll assess a portfolio’s susceptibility to such excessive unpleasantness by checking its annual return distribution.
The extra typically a portfolio deep-dives into unfavourable territory, the riskier it’s: 
A portfolio comprising 100% World equities has misplaced practically 40% of its worth – in a single yr – twice within the final 50 years. And drawdowns of between 15% and 30% in a single yr are customary.
Then again, double-digit advances are widespread, too.
In brief, a 100% equities portfolio is an Oblivion-grade rollercoaster.
Distinction that with the extra common 60/40 portfolio:
Eye-watering losses are fewer and shallower. However by the identical token, blistering positive aspects are additionally much less frequent. Annual returns usually tend to land in a middling consolation zone.
When you just like the sound of that then you definately’ll love the Everlasting Portfolio’s observe file:
The Everlasting Portfolio rarely racks up a double digit loss. Within the overwhelming majority of years it makes regular progress and conserves what you might have.
Why the Everlasting Portfolio works
The important thing to the Everlasting Portfolio’s stabler returns is its diversification, particularly its out-sized allocation to gold:
Asset class correlation matrix: month-to-month actual whole returns 1970-2025
Fast correlation recap:
- 1 = Good optimistic correlation: when one asset goes up so does the opposite
- 0 = Zero correlation: the 2 belongings being measured don’t have any affect upon one another
- -1 = Good unfavourable correlation: when one asset goes up, the opposite goes down
These are extraordinarily good numbers. Low and near-zero figures point out the portfolio’s belongings are exceptionally diversified.
Completely at odds
Even well-differentiated fairness sub-asset courses usually have correlations starting from 0.8 to 0.9+. The best right here is 0.39 betwixt lengthy gilts and cash market (which stands in for money within the combine).
Even 0.39% is a reasonably low correlation because it goes, whereas the opposite – nonetheless higher – numbers go a protracted option to explaining the low-volatility nature of the Everlasting Portfolio. Mainly when one among its asset is face-planting then the others normally trot on, comparatively unbothered.
In fact, by the identical token if World equities are on a tear, then it’s additionally seemingly that others among the many belongings shall be dragging their heels.
Therefore, throughout bullish instances it’s necessary to deal with the Everlasting Portfolio’s objective of stability. In any other case you’ll be eternally grousing about how some laggard or one other is cramping your type.
Diversification and gold
Right here’s an illustration of how gold particularly has traditionally proved a diversifier for UK fairness traders:
The chart reveals how properly gold counteracted falls in World equities. Precisely if you’d most wish to see a non-stock asset go up – to offset the ache of plunging share costs!
It’s particularly notable as a result of in a crash correlations improve. That’s, most belongings are inclined to fall collectively. So in case you can personal one thing that doesn’t, you’ll sometime in all probability be glad of it.
Backside line: the massive allocation to gold is the oddest however maybe additionally crucial side to the Everlasting Portfolio.
What have you ever achieved for me currently?
The Everlasting Portfolio regained recognition between the inventory market crash of 2008 and the height of the gold market bull run in 2011. Scarred by reminiscences of the still-recent world fairness rout and attracted by the attract of gold, new adherents flocked to its defensive asset allocation.
With hindsight that was poor timing. This explicit golden age didn’t final lengthy – the yellow steel nose-dived 40% from late 2011 till the top of 2015.
Gold has since bounced again with a vengeance, nonetheless. And inventory markets have soared too.
But Everlasting Portfolio traders had to deal with their worst ever drawdown of -21.5% in 2023, as all 4 belongings struggled with the post-Covid inflation and rate of interest double-whammy.
Survivor’s gilt
No asset was extra of a legal responsibility in 2022 and 2023 than lengthy gilts. They suffered a dreadful 61% decline from their peak on the outbreak of Covid.
Regardless of that shock, I’d say the Everlasting Portfolio coped moderately properly. Its 21.5% loss in 2023 is not more than a foul chilly compared to the worst maladies that may befall a stock-heavy asset allocation.
And since then the Everlasting Portfolio has recovered its losses and resumed its ahead march.
Do latest occasions imply that lengthy gilts are damaged? No. They’re no extra damaged than equities or gold proper after they crash. These belongings are simply as succesful, if no more so, of delivering an appalling efficiency.
The actual studying level is that though the Everlasting Portfolio seems outwardly uninteresting, it truly invests in three extremely unpredictable belongings. Each can punch the lights out or punch you within the face.
The genius of Harry Browne is that he selected these risky belongings as a result of they will cowl for one another.
One in all them is normally charging ahead, whereas one other is heading for the sphere hospital.
In the meantime money plods alongside maintaining the rear.
It’s onerous to credit score, however highly-volatile people can create a surprisingly harmonious setting although all seems to be churn and chaos.
Assume The Expendables, however with Sharper ratios.
Investing within the Everlasting Portfolio
The Everlasting Portfolio is a self-reliant DIY traders’ dream.
Not so simple as the very easiest world shares and bond combine, admittedly. However a Everlasting Portfolio shouldn’t take greater than half an hour to arrange, and the identical once more every year to rebalance.
My co-blogger The Accumulator gave an instance setup in his evaluate of mannequin portfolios for DIY traders.
Evidently try to be investing in ISAs and SIPPs to keep away from your portfolio being ravaged by tax.
Completely a spot for the Everlasting Portfolio
Lively investing is my ardour. At instances I’ve approached 100 holdings. I’ll additionally settle for larger volatility for hopefully larger returns.
So the Everlasting Portfolio is just too easy for me. And realistically, I can’t think about placing 25% in gold.
All that mentioned, in comparison with after I first realized in regards to the technique a few many years in the past – again after I was fortunately all-in on equities – my have to diversify has elevated. Absolutely the quantity I’ve invested has grown lots, and my time horizon has shrunk.
The Everlasting Portfolio – and its historical past of respectable returns with minimal volatility – is a helpful reminder that well-considered diversification needn’t be a recipe for stagnation.
These trying to scale back volatility of their portfolios – particularly round retirement D-Day – may do worse than spend a couple of minutes fascinated with what it has to show us.
