Disclaimer from [[Investing Playbook]] still applies. :) # Introduction - Like for the [[Permanent Portfolio - Investing strategy]], this portfolio presented below is not the best investing strategy that exists. - It's just a low-maintenance, low-fees, low-volatility, good-performance strategy, as per the criteria I picked for this strategy here: [[Investing Playbook]]. # The Golden Butterfly Portfolio - The Golden Butterfly Portfolio (by Tyler from Portfolio Charts) was inspired by the Permanent Portfolio. - While the Permanent Portfolio balances between inflation, prosperity, deflation and recession, the Golden Butterfly favors prosperity a bit more. It can easily be argued that over the long term, the market sees more prosperty than the other 3 periods, so it would make sense to reflect it in the portfolio. - Also, when the Permanent Portfolio was invented by Harry Browne, stocks was just one basket. It wasn't a thing to compare the performance of small vs large stocks as a whole or value vs non-value. And there were no index funds to track them. - **The Golden Butterfly Portfolio** - 20% Large Cap Stock : typically tracked with S&P500 ETF - 20% Small Cap Value : Russell 2000 ETF - 20% Long Term Bonds : a 20+ year Treasury Bond ETF - 20% Short Term Bonds : a 7-10 year Treasury Note ETF - 20% Gold : Gold ETF # How does the Golden Butterfly compare to other portfolio strategies? - **Performance vs the market** - Similar long term real CAGR (1972-2015) to the market: 5.7%/year vs 5.9%/year - While reducing reducing drawdonws: -11.2% vs -37.1% worst year - Source: [Catching a Golden Butterfly – Portfolio Charts](https://portfoliocharts.com/2015/09/22/catching-a-golden-butterfly/) - **Performance vs Permanent Portfolio** - Higher performance & higher risk-adjusted return (including the slightly higher volatility) than the Permanent Portfolio - Source: [Golden Butterfly Portfolio Review and M1 Finance ETF Pie](https://www.optimizedportfolio.com/golden-butterfly-portfolio/#what-is-the-golden-butterfly-portfolio) - Overall the Golden Butterfly is among the top portfolio strategies when comparing risk & return: [Golden Butterfly Portfolio – Portfolio Charts](https://portfoliocharts.com/portfolios/golden-butterfly-portfolio/#performance) ![[Golden Butterfly - PortfolioCharts 1.png]] ![[Golden Butterfly - PortfolioCharts 2.png]] # Going further - The Golden Butterfly compares slightly better to the Pinwheel Portfolio (which is similar but is even more equally divided into sub-buckets and includes Emerging Markets, REITs, International Stocks, Intermediate Bonds on top of the other buckets): [Golden Butterfly Portfolio vs Pinwheel Portfolio – Which is Best?](https://pensioncraft.com/golden-butterfly-portfolio-vs-pinwheel-portfolio-which-is-best/) - [Golden Butterfly Portfolio: How I Invest with Tyler of Portfolio Charts](https://pictureperfectportfolios.com/golden-butterfly-portfolio-how-i-invest/)