Permanent Portfolio

AAA

DEFINITION of 'Permanent Portfolio'

A portfolio construction theory devised by free-market investment analyst Harry Browne in the 1980s. Browne constructed what he called the permanent portfolio, which he believed would be a safe and profitable portfolio in any economic climate. Using a variation of efficient market indexing, Browne stated that a portfolio equally split between growth stocks, precious metals, government bonds and Treasury-bills would be an ideal investment mixture for investors seeking safety and growth.

INVESTOPEDIA EXPLAINS 'Permanent Portfolio'

Harry Browne argued that the portfolio mix would be profitable in all types of economic situations: growth stocks would prosper in expansionary markets, precious metals in inflationary markets, bonds in recessions and T-bills in depressions. Browne eventually created what was called the Permanent Portfolio Fund, with an asset mix similar to his theoretical portfolio in 1982. Over a 25-year period, the fund averaged an annual return of 6.38%, only losing money three times.

RELATED TERMS
  1. Market Portfolio

    A theoretical bundle of investments that includes every type ...
  2. Portfolio Plan

    An investment strategy applied to a personal or corporate portfolio ...
  3. Portfolio

    A grouping of financial assets such as stocks, bonds and cash ...
  4. Optimization

    In the context of technical analysis, it is the process of adjusting ...
  5. Risk Measures

    Statistical measures that are historical predictors of investment ...
  6. Asset Allocation

    An investment strategy that aims to balance risk and reward by ...
Related Articles
  1. Rebalance Your Portfolio To Stay On ...
    Personal Finance

    Rebalance Your Portfolio To Stay On ...

  2. 5 Tips For Diversifying Your Portfolio
    Investing Basics

    5 Tips For Diversifying Your Portfolio

  3. Introduction To Investment Diversification
    Investing Basics

    Introduction To Investment Diversification

  4. The Dangers Of Over-Diversifying Your ...
    Insurance

    The Dangers Of Over-Diversifying Your ...

comments powered by Disqus
Hot Definitions
  1. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  2. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  3. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
Trading Center