Desert Portfolio
The Desert Portfolio is a simple three-asset allocation that originated from discussions on the Gyroscopic Investing forum. It holds 30% stocks, 60% intermediate-term bonds, and 10% gold -- a structure that can be thought of as a risk-parity-inspired variant of the Permanent Portfolio, with a slightly higher equity allocation and considerably less gold. The name comes from the forum community where it was developed, not from any specific design philosophy tied to arid environments.
Signals are available for a curated set of tactical portfolios. This portfolio is not currently covered.
See covered portfoliosarrow_forwardTarget Allocation
Performance Snapshot
Rolling Returns
| Period | Low | Average | High |
|---|---|---|---|
| 1 Year | -15.8% | +7.6% | +23.9% |
| 3 Year | -1.8% | +7.3% | +14.7% |
| 5 Year | +3.0% | +7.2% | +12.6% |
| 10 Year | +3.9% | +7.1% | +9.4% |
Growth of $10,000
Historical Drawdown
Percentage decline from the portfolio's peak value at each point in time.
Rolling Returns
Annualised return for each rolling period ending on that date.
Annualised return for each 1Y period ending on that date.
Investment Philosophy
The Desert Portfolio is built on the idea that three uncorrelated assets -- equities, bonds, and gold -- can together weather most economic environments without requiring any views on which will outperform. The heavy bond weighting is not arbitrary: intermediate-term treasuries carry roughly twice the volatility of stocks, so a 60% allocation brings bonds closer to parity in terms of their contribution to overall portfolio risk. The result is a portfolio that leans heavily toward capital preservation while maintaining modest growth potential.
Who It's For
This portfolio suits conservative investors, retirees, or anyone in wealth-preservation mode who wants a simple, low-maintenance allocation with meaningful downside protection. It also appeals to investors skeptical of large equity concentrations who prefer a more balanced exposure across economic regimes.
Pros
- Three-asset simplicity makes it easy to understand and rebalance
- Heavy bond allocation and gold holding provide meaningful cushioning during equity bear markets
- Risk-parity-inspired weighting reduces the dominance of any single asset class
Cons
- Low equity allocation significantly constrains long-run growth potential
- Gold is a non-yielding asset that can drag on returns during prolonged equity bull markets
- The portfolio accepts below-average long-run returns in exchange for reduced volatility and drawdown protection
Technical Notes
The portfolio is typically rebalanced annually. The intermediate-term bond allocation distinguishes it from the Permanent Portfolio's use of long-term treasuries -- intermediate bonds carry less interest rate risk while still providing meaningful equity diversification.
Related Portfolios
How Index Fund Portfolios Performed in the Two Worst Crashes of the Last 25 Years
Download the free PDF — plus get monthly portfolio insights from PortfolioDB.