Hello all, do we know whether it is possible to replicate the all-weather strategy on Free trade at this point in time?
Can you explain what it is for those that don’t know (me)?
(Source: Ray Dalio All Weather Portfolio: ETF allocation and returns)
The portfolio:
- 30% Stocks
- 55% Fixed Income
- 15% Commodities
Results:
-In the last 10 years, the portfolio obtained a 7.21% compound annual return, with a 5.78% standard deviation.
- In 2019, the portfolio granted a 2.03% dividend yield.
The Ray Dalio All Weather Portfolio can be replicated with the following U.S. ETFs:
| Weight | Ticker | ETF Name | Investment Themes | |
|---|---|---|---|---|
| 30.00 % | VTI | Vanguard Total Stock Market | Equity, U.S., Large Cap | |
| 40.00 % | TLT | iShares 20+ Year Treasury Bond | Bond, U.S., Long-Term | |
| 15.00 % | IEI | iShares 3-7 Year Treasury Bond | Bond, U.S., Intermediate-Term | |
| 7.50 % | GLD | SPDR Gold Trust | Commodity, Gold | |
| 7.50 % | GSG | iShares S&P GSCI Commodity Indexed Trust | Commodity, Broad Diversified |
FT has multiple equivalent ETFs for all of them.
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Freetrade Ray Dalio all-weather portfolio:
| Weight | Ticker | ETF Name | Investment Themes | |
|---|---|---|---|---|
| 30.00 % | VUSA | Vanguard S&P 500 UCITS ETF (Dist.) | Equity, U.S., Large Cap | |
| 40.00 % | IBTL | iShares $ Treasury Bond 20+ year UCITS ETF USD Unhedged | Bond, U.S., Long-Term | |
| 15.00 % | IGTM | iShares 7-10 Year Treasury Bond* | Bond, U.S., Medium-Term | |
| 7.50 % | SGLN | iShares Physical Gold ETC | Commodity, Gold | |
| 7.50 % | COMM | iShares Diversified Commodity Swap UCITS ETF (GBP) | Commodity, Broad Diversified |
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You need to be careful with this portfolio. I use it as the mainstay of my investments but the ETFs you use to replicate it must be hedged. Without hedging the backtesting falls apart. Also Bitcoin may be worth considering as part of the 7.5% allocation to gold given the recent amount of data which shows Bitcoin is a better hedge than gold (the past does not predict the future DYOR).
I can see your point about hedged ETFs.
There are hedged ETFs on Freetrade. I’ll check for the equivalents later.
Can you link to that data please.
Not sure I agree with the rationale of a portfolio consisting of 85% US equities and government bonds.
I think this might be more credible as a defensive portfolio if used a global equity ETF a global fixed income ETF (including corporate bonds).
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Here’s an alternative all weather porfolio, courtesy of Monevator:
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This is a useful article! A lot of financial guidance out there is U.S. focused, finally an article that’s not.
Any thoughts on VEVE v VWRL? I’m relatively young and could take on more risk.
With VEVE, you’ll probably want a small cap fund alongside too. As veve is large cap equity.
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VEVE is also developed only, so you’d want some VFEM if you wanted a balanced portfolio.
There’s quite a bit of discussion around the equity piece in this thread which may be helpful (you could just add in the defensive asset classes on top)