All-Weather (Dalio) vs 100% Global Equities
All-Weather is built to hold up in any economic regime, which necessarily means giving up some of what equities offer in the regimes that suit them. Whether that trade pays depends on how much of the return you keep once the portfolio is levered up to the risk an all-equity investor already accepts.
Set both to the same 16.8% volatility and 100% Global Equities comes out ahead, returning 7.00% against All-Weather (Dalio)'s 6.90%, a gap of 0.10 percentage points a year.
Side by side
| At its own risk level | All-Weather (Dalio) | 100% Global Equities |
|---|---|---|
| Expected return | 5.06% | 7.00% |
| Volatility | 7.41% | 16.78% |
| Sharpe ratio | 0.26 | 0.23 |
Forward-looking estimates over a long horizon, not a measurement of any past period. Built from J.P. Morgan’s 2026 Long-Term Capital Market Assumptions, annualised and compounded, with a 3.10% risk-free rate.
The same comparison at matched risk
The table above compares two portfolios that take different amounts of risk, so part of any gap is just that. Below, the quieter portfolio is levered until both sit at 16.78% volatility. Exposure above one hundred percent is financed at cash plus 0.50 percentage points; anything under it earns the cash rate.
| Both at 16.78% volatility | Exposure | Expected return |
|---|---|---|
| All-Weather (Dalio) | 226% | 6.90% |
| 100% Global Equities | 100% | 7.00% |
Leverage is applied to the whole portfolio and assumes it can be financed at the stated rate, which is closer to true for a futures-based implementation than for a margin account. It does not model the path, and a levered portfolio can be forced to sell at exactly the wrong moment.
What actually happened
Everything above is an expectation. This is the record. The window starts in September 2000 because that is the first month in which every asset class in both portfolios has data, and it runs to July 2026, which is 311 months. It is not a chosen period; a pair holding private equity or inflation-linked bonds simply cannot start earlier than those markets can be measured.
| September 2000 to July 2026 | All-Weather (Dalio) | 100% Global Equities |
|---|---|---|
| Annualised return | 5.30% | 6.97% |
| Volatility | 6.69% | 15.77% |
| Sharpe ratio | 0.33 | 0.25 |
| Worst drawdown | -20.31% | -55.00% |
Rebalanced annually, with no fees or trading costs applied, so the figures compare the allocations rather than an implementation of them. Series are index and fund total returns, extended backwards before each ETF existed by the longer-running instrument tracking the same exposure.
The record at matched risk
| Both at 15.77% volatility | Exposure | Annualised return |
|---|---|---|
| All-Weather (Dalio) | 236% | 6.77% |
| 100% Global Equities | 100% | 6.97% |
One window is one path. A record covering 26 years contains a particular sequence of regimes, and a portfolio that happened to hold the right asset through them will look better than it deserves. Read this next to the forward-looking figures rather than instead of them. Borrowing is charged at the cash rate plus 0.50 percentage points, the same terms as the forward-looking table. Note the size of the exposure needed here. Holding a portfolio at more than twice its own value is a different proposition from the portfolio itself, and the arithmetic above assumes it can be financed and maintained without ever being closed out.
What each one holds
| Asset class | All-Weather (Dalio) | 100% Global Equities |
|---|---|---|
| AC World Equity | 30% | 100% |
| US Intermediate Treasuries | 15% | — |
| World Govt Bonds | 15% | — |
| TIPS | 15% | — |
| Cash / Money Market | 10% | — |
| Gold | 7.5% | — |
| Commodities (Broad) | 7.5% | — |
The trade being made
All-Weather takes far less equity risk and replaces it with duration, inflation protection and real assets. That is why it falls much less in an equity bear market, and also why it cannot keep up during a long bull run in shares.
Levering it to equity-like volatility asks whether the diversification was efficient enough to be worth financing. It is the fairest test available and also a demanding one, because the financing cost is charged in full while the benefit shows up only in periods the window may or may not contain.
What the numbers cannot tell you
The all-equity portfolio's worst drawdown is the number to look at hardest. Expected returns are earned by investors who stay invested, and a fall of that size has ended more plans than any assumption in the model.
All-Weather's much shallower drawdown is the product being sold. If it is the difference between staying invested and capitulating, it is worth more than the return gap in either direction.
Frequently asked questions
Does the All-Weather portfolio beat the stock market?
Not on raw return, and it is not designed to. Adjusted to the same level of risk the two are far closer than the headline returns suggest, and All-Weather's advantage shows up in a much shallower worst drawdown.
Why does All-Weather hold so much in bonds?
Because risk rather than capital is what it spreads evenly. Bonds are less volatile than shares, so balancing the contribution each asset makes to portfolio risk requires holding considerably more of them by value.