All Weather Portfolio Shows Lower Volatility Than Equity Alternatives

A Zerodha Varsity backtest comparing investment strategies from 2011 to 2026 found that Ray Dalio’s All Weather portfolio returned 9.9% annually, trailing the 10.4% return of a 60:40 portfolio and the 12% Nifty 500 TRI return. However, the All Weather strategy demonstrated significantly lower volatility at 5.7% and a smaller peak-to-trough decline of 6.4%.

During the Covid-19 market crash, the All Weather portfolio fell 6.4%, compared to 17.6% for the 60:40 portfolio and 31.8% for the Nifty 500 TRI. While this strategy offers resilience through gold and bond diversification, its performance remains subject to how various asset classes respond to specific economic conditions.

Editor's note: Concise and accurate reporting of the backtest results and the risk-reward trade-offs.