Robbins' All-Seasons Portfolio

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Key Facts

  • passive portfolio
  • based on Ray Dalio's All-Weather portfolio
  • invests in
    • U.S. stocks
    • U.S. treasury bonds
    • Commodities
    • Gold

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Summary

Tony Robbins is a board member and Chief of Investor Psychology at Creative Planning, Inc., a Registered Investment Advisor with over $18 billion in assets under management. He published the All-Seasons Portfolio in his 2014 book Money - Master the Game.

Robbin's All-Seasons Portfolio is a simplified version of Ray Dalio's All-Weather Portfolio, aiming to provide smooth returns across all economic environments.

The All-Seasons Portfolio is passive and, therefore, has only minimal maintenance requirements.

Performance

The chart above shows the portfolio’s historical performance and drawdowns, compared to their benchmark, throughout the simulation. The chart below shows the portfolio’s annual returns:

This table shows the performance metrics for Robbins' All-Seasons Portfolio:

Asset Allocation

The portfolio last required rebalancing after the exchange's close on n/a. Due to fluctuations in asset prices and portfolio values, the exact allocations vary daily. The current asset allocation is as follows:

- Delayed Data -

Review

Ray Dalio is the founder of Bridgewater Associates, one of the world largest hedge-funds, and widely recongized for pioneering the concept of a risk parity portfolio optimized for all market conditions. Dalio recognizes four major economic environments or 'seasons':

  • higher than expected inflation
  • lower than expected inflation (deflation)
  • higher than expected economic growth
  • lower than expected economic growth

For each of these seasons, Ray Dalio tailors a portfolio addressing the season's challenges. These portfolios are then weighted such that they represent equal amounts of risk resulting in the portfolio's overall asset allocation. Because of this risk parity and the observation that stocks are more volatile than bonds, the portfolio contains a relatively low percentage of stocks.

While Robbins' All-Seasons Portfolio is based on the same ideas as Bridgewater's All-Weather Portfolio, the latter employs leverage and an active management component.

The All-Seasons Portfolio is not aimed at greedy investors. Instead, it focuses on reducing risk and providing steady returns. Historically, the portfolio has delivered on this objective.

However, the portfolio construction might not cover all possible scenarios. Because the All-Seasons Portfolio contains an unusually large percentage of bonds, it bears a substantial interest-rate risk. Over the past 40 years, falling interest rates have bolstered bond returns. Should interest rates start to rise, the overall portfolio performance will most likely suffer substantially.

Diversification

The All-Seasons Portfolio's construction is all about diversification. Robbins' portfolio is well diversified across multiple asset classes and manages to do well in almost all economic environments.

Returns & Volatility

Since the end of the last economic cycle in early 2008, the All-Seasons Portfolio has delivered remarkably smooth returns. Through losing less during the 2008 recession, the overall portfolio returns over the past 12 years are about on par with a passive 60/40, even though the All-Seasons Portfolio is trailing its passive cousin year after year. However, the Monte-Carlo simulation shows that the All-Seasons Portfolio bears substantially less risk.

While Tony Robbins claims the portfolio's annualized performance to be just shy of 10%, more recent returns are much lower.

Account & Tax Considerations

Due to its passive nature, the All-Seasons Portfolio is very tax-efficient. Except for a small percentage of assets affected by rebalancing, the portfolio holds the same ETFs throughout. Therefore, Robbins' portfolio triggers only a few taxable events for its capital gains.

However, investors need to tax the dividends and bond interest received in the years they occurred. As the All-Seasons Portfolio contains a higher percentage of bonds than most passive stock/ bond portfolios, a higher percentage of the portfolio's returns are taxable at the income tax rate.

An account size of $5,000 should be sufficient to hold the portfolio's five ETFs.