Permanent Portfolio (Browne) vs 60/40 Classic
The Permanent Portfolio holds equal quarters of stocks, long bonds, gold and cash. The 60/40 holds shares and bonds in a fixed ratio and nothing else. One is built to survive any economic weather, the other to capture a straightforward risk premium as cheaply as possible.
Set both to the same 10.6% volatility and 60/40 Classic comes out ahead, returning 5.95% against Permanent Portfolio (Browne)'s 5.71%, a gap of 0.24 percentage points a year.
These two views disagree: the forward-looking assumptions favour 60/40 Classic, while the record since September 2000 favours Permanent Portfolio (Browne). That is worth more than either number on its own. The historical figure is one path through one set of decades, and this window contains two equity bear markets and a long gold bull run. The forward-looking figure starts from today's valuations and yields, which is the situation you are actually investing from.
Side by side
| At its own risk level | Permanent Portfolio (Browne) | 60/40 Classic |
|---|---|---|
| Expected return | 4.90% | 5.95% |
| Volatility | 6.54% | 10.63% |
| Sharpe ratio | 0.28 | 0.27 |
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 10.63% volatility. Exposure above one hundred percent is financed at cash plus 0.50 percentage points; anything under it earns the cash rate.
| Both at 10.63% volatility | Exposure | Expected return |
|---|---|---|
| Permanent Portfolio (Browne) | 163% | 5.71% |
| 60/40 Classic | 100% | 5.95% |
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 | Permanent Portfolio (Browne) | 60/40 Classic |
|---|---|---|
| Annualised return | 6.32% | 5.74% |
| Volatility | 5.95% | 9.56% |
| Sharpe ratio | 0.54 | 0.28 |
| Worst drawdown | -9.59% | -33.54% |
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 9.56% volatility | Exposure | Annualised return |
|---|---|---|
| Permanent Portfolio (Browne) | 161% | 7.78% |
| 60/40 Classic | 100% | 5.74% |
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.
What each one holds
| Asset class | Permanent Portfolio (Browne) | 60/40 Classic |
|---|---|---|
| AC World Equity | 25% | 60% |
| US Aggregate Bonds | — | 30% |
| US Intermediate Treasuries | 25% | — |
| Gold | 25% | — |
| Cash / Money Market | 25% | 10% |
Half the portfolio earns nothing directly
Gold and cash together make up half the Permanent Portfolio, and neither produces earnings or coupons. Their job is to hold value when the other half is falling, which is a real function, but it means the portfolio gives up a great deal of expected return to buy stability.
That trade is visible in the numbers below. The Permanent Portfolio's volatility is far lower, and so is its expected return. Whether the exchange is worth it depends entirely on whether you would have sold the more volatile portfolio at the bottom.
The honest way to settle it
Comparing the two at their natural risk levels answers the wrong question. Levering the Permanent Portfolio to the 60/40's volatility asks the right one, which is whether its diversification is efficient enough to survive the cost of the leverage needed to make the comparison fair.
Frequently asked questions
Is the Permanent Portfolio a good alternative to a 60/40?
It is a genuinely different bet rather than a refinement of the same one. It trades expected return for stability across economic conditions, which suits an investor whose main risk is abandoning the plan in a drawdown.
Does holding 25% gold still make sense?
It is a large allocation by any institutional standard, and it is the main reason the portfolio behaves differently from a conventional balanced fund. The case for it rests on gold's behaviour during inflation and currency stress rather than on its expected return.