Tactical Permanent Portfolio
The Tactical Permanent Portfolio was developed by the team at ReSolve Asset Management and published on their GestaltU research blog in 2012. It starts with Harry Browne's classic Permanent Portfolio — equal parts stocks, long-term bonds, gold, and cash — and applies three systematic overlays designed to reduce drawdowns and improve risk-adjusted returns.
Average Allocation
Based on historical average weights across all rebalance periods.
Performance Snapshot
Rolling Returns
| Period | Low | Average | High |
|---|---|---|---|
| 1 Year | -7.6% | +8.8% | +34.2% |
| 3 Year | +0.4% | +8.3% | +22.1% |
| 5 Year | +2.4% | +8.4% | +18.8% |
| 10 Year | +3.7% | +8.6% | +13.9% |
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
Browne's original portfolio holds all four assets at fixed weights regardless of market conditions. ReSolve's critique is that equal capital weighting disguises a significant imbalance: equities and gold contribute five to eight times more volatility than Treasuries, meaning the portfolio's risk profile is far less balanced than its allocation suggests. The tactical version addresses this by replacing equal-weight with risk parity sizing, filtering out assets in downtrends using a 200-day moving average, and applying a 7% annualized volatility target that shifts the portfolio toward cash during turbulent periods.
Who It's For
This portfolio suits an investor who appreciates the all-weather logic of the Permanent Portfolio but wants a more active approach to managing drawdowns. It requires monthly monitoring and a willingness to hold significant cash or bond allocations when trend signals are weak.
Pros
- Risk parity weighting corrects the original Permanent Portfolio's hidden equity and gold risk concentration
- The 200-day moving average filter reduces exposure during sustained downtrends in any individual asset
- The 7% volatility target provides a systematic mechanism for reducing portfolio risk during volatile markets
Cons
- Monthly rebalancing adds complexity and potential tax drag relative to a buy-and-hold approach
- Risk parity weighting results in a substantially larger bond allocation on average, which creates meaningful interest rate sensitivity
- Trend filters can lag turning points, resulting in whipsaw trades during choppy markets
Technical Notes
The strategy rebalances on the last trading day of each month. Assets are included only if they closed above their 200-day moving average on the prior trading day. Surviving assets are weighted by risk parity, then the overall portfolio volatility is calculated using a 60-day lookback. If projected volatility exceeds 7%, the entire portfolio is scaled down proportionally, with the remainder held in cash.
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