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Permanent Portfolio ETF?

March 23, 2012 | About:
shaunconnell

shaunconnell

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A couple of days ago, I wrote an article talking about how to set up a permanent portfolio that essentially allowed the investor to focus more time on other things than actively managing the portfolio.

The portfolio is frighteningly simple, has done amazingly well over the last 10 years, and includes the following:

25% Stocks

25% Bonds

25% Gold

25% Cash

The general idea is to have a portfolio that stays afloat in every economic environment, whether it's inflationary or deflationary. It did fairly during the 90s and simply fantastic during the 00s. How it will do during the 10s is anyone's guess -- though it'll probably keep up the overall pace.

In February, a new ETF was launched by New York based Global X Funds. The fund tracks different ETFs, and includes REITs in its stock make up. It rebalances the fund at least once per year.

Is the permanent portfolio ETF a good idea? I'm not entirely sure. Time will tell. It'll be competing directly with the Permanent Portfolio Fund, a similar mutual fund that has actual physical gold. The mutual fund hasn't beaten the stock market since it was created, but it has soundly beaten the market over the last ten years.

The permanent portfolio is good for money that isn't "losable" -- that is, money needed for retirement. If someone isn't sure how to invest or pick mutual funds, it's a good safe-haven place that will stay steady even if there's economic turbulence. Mixing it with another stock index fund is likely a good idea.

Over the next few years, we'll see if the ETF or the mutual fund outperform each other.

Rating: 2.9/5 (7 votes)

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