It is an interesting concept to construct a permanent portfolio using ETFs. Permanent Portfolio ETF Version uses ETFs to mimic the Permanent Portfolio mutual fund PRPFX holdings: GLD, SLV, FXF, IGE, IYR, VTI, LQD, SHY, IEF. See a lazy portfolio Permanent Portfolio ETF Version for static version.
The following is the PRPFX’s allocaiton based on its recent report.
Portfolio Structure
Gold 20% Silver 5%
Swiss Franc Assets 10%
U.S. and Foreign Real Estate and Natural Resource Stocks 15%
Aggressive Growth Stocks 15%
U.S. Treasury Bills, Bonds and Other Dollar Assets 35%
Compared with PRPFX, the portfolio has out performed:
| Symbol | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 1 Yr | 3 Yr | 5 Yr | |
|---|---|---|---|---|---|---|---|---|---|---|
| AR(%) | P_33520 | 8.67 | 13.4 | -7.68 | 16.1 | 19.45 | 3.09 | 5.88 | 13.13 | 8.42 |
| PRPFX | 13.81 | 12.43 | -8.36 | 19.69 | 19.31 | 0.17 | 2.52 | 12.37 | 7.98 | |
| SharpeRatio(%) | P_33520 | 82.67 | 120.77 | -57.04 | 123.28 | 206.41 | 28.63 | 55.46 | 117.39 | 65.42 |
| PRPFX | 118.51 | 113.56 | -63.09 | 128.05 | 196.54 | 3.67 | 65.39 | 88.53 | 65.23 | |
| DrawDown(%) | P_33520 | 0.039 | 0.042 | 0.234 | 0.08 | 0.056 | 0.091 | 0.091 | 0.091 | 0.234 |
| PRPFX | 0.103 | 0.055 | 0.272 | 0.099 | 0.057 | 0.092 | 0.092 | 0.151 | 0.272 |
The out performance is mostly due to the fees charged by the fund. Thus, investors who wish to save some fees or wish to have a better control on their portfolios (such as for tax reasons and/or other purposes like hedging using options) can construct such an all ETF portfolio to get permanent portfolio benefits. On the other hand, hands off investors can consider just buying PRPFX.
Diversified Asset Allocation Portfolios For Your Plans
