The Golden Ratio Portfolio by Frank Vasquez is a risk parity asset allocation that mixes modern assets in classic percentages to balance risk.
Asset Allocation
Change the home country to translate the portfolio to local asset options.
| % | Asset Class |
|---|---|
| 21% | United States Large Cap Growth Stocks |
| 21% | United States Small Cap Value Stocks |
| 26% | United States Long Term Treasury Bonds |
| 6% | United States Treasury Bills |
| 16% | Global Gold |
| 10% | Global Commodities |
Asset Notes
- Frank specifically calls for 10% managed futures. I don’t have data for that asset, so I allocated it to commodities (which tracks an index of commodities futures). That at least covers a portion of many managed futures funds and is similarly uncorrelated to both stocks and bonds.
Managed futures are complex instruments with lots of moving parts, and this is admittedly not an ideal match. So be aware that there may be significant tracking error with this portion of the portfolio in the Portfolio Charts numbers.
For another asset option consistent with past iterations of the Golden Ratio Portfolio, you might also consider REITs. That’s what Frank allocated to the 10% slot before switching the default recommendation to managed futures.
Author
Frank Vasquez
Frank Vasquez holds degrees in economics, engineering, and law while applying them all in the financial independence community. You can learn about his investing ideas on his podcast Risk Parity Radio. Frank encourages fans to show their support by donating to his favorite local charity, the Father McKenna Center.
Overview
The Golden Ratio Portfolio is named after an ancient mathematical fascination with the specific ratio 1.618 that appears often in nature and has long been associated with elegance and beauty. The portfolio percentages thus flow down from the largest 42% stock allocation to the smallest 6% following the golden ratio at each step along the way.
While the structure of the portfolio reflects the depth of Frank Vasquez’s knowledge in the history of art and science, the economic concepts are strictly contemporary. Frank is an accomplished portfolio voice in his own right with a particular skill in explaining risk parity concepts to normal people.
Within the golden ratio framework, each asset is positioned into the right spot to balance the portfolio as a whole. With specific allocations to both growth and value stocks and also a sizable allocation to alternatives like commodities and gold, it utilizes modern investing concepts in classic percentages to survive and thrive in any market condition.
Featured Discussion
Performance
Calculations use localized assets and data for the selected home country.
Comparisons
Calculations use localized assets and data for the selected home country.
Alternatives
Portfolios with a similar structure or design intent
Golden Butterfly — Very similar concept with more cash and different large caps
All Seasons Portfolio — A similar investing philosophy built around economic risk parity
Weird Portfolio — A different twist including international diversification
Articles
Insights that mention the Golden Ratio Portfolio
Discussion
Join the conversation
