If you have decided that a fixed-allocation portfolio suits your temperament better than tactical strategies, the next question is: which one? Three portfolios dominate the conversation: the Classic 60/40, Ray Dalio’s All Weather, and Tyler from PortfolioCharts’ Golden Butterfly. Each takes a fundamentally different approach to balancing growth and protection, and each shines in different market environments.
This is not a theoretical exercise. Real money has followed these allocations for decades. Let us look at what the data actually shows.
The Three Allocations
Classic 60/40
The simplest and most widely used allocation in investing: 60% US stocks, 40% US bonds. It is the default benchmark for balanced portfolios and what most financial advisors recommend as a starting point. The logic is straightforward—stocks provide growth, bonds provide stability and income.
All Weather (Ray Dalio)
Designed by Bridgewater Associates, the All Weather portfolio aims to perform acceptably in any economic environment: growth, recession, inflation, or deflation. The typical allocation is 30% US stocks, 40% long-term bonds, 15% intermediate bonds, 7.5% gold, and 7.5% commodities. It is heavily tilted toward bonds because bonds have lower volatility—the portfolio targets risk parity, not equal dollar amounts.
Golden Butterfly
Created by Tyler at PortfolioCharts, the Golden Butterfly splits evenly across five asset classes: 20% US total stock market, 20% US small-cap value, 20% long-term bonds, 20% short-term bonds, and 20% gold. It is designed to capture growth from equities and small-cap value, stability from short bonds, upside in deflationary crashes from long bonds, and inflation protection from gold.
Historical Performance Comparison
Looking at backtested data from 1972 through 2025 (the longest period where all asset classes have reliable data), the differences are revealing:
| Metric | 60/40 | All Weather | Golden Butterfly |
|---|---|---|---|
| CAGR | 9.6% | 8.1% | 9.2% |
| Max Drawdown | -32.5% | -13.8% | -15.2% |
| Worst Year | -22.2% | -9.1% | -10.8% |
| Best Year | +32.8% | +21.5% | +26.3% |
| Sharpe Ratio | 0.54 | 0.55 | 0.60 |
| Std. Deviation | 11.2% | 7.8% | 8.5% |
| Positive Years | 81% | 85% | 86% |
Several things stand out. The 60/40 has the highest raw return, but also the worst drawdown by a wide margin. All Weather has the smallest drawdown but gives up about 1.5% annualized return for that protection. The Golden Butterfly threads the needle: nearly matching 60/40 returns while cutting the maximum drawdown roughly in half.
How They Handled Major Crises
2008 Financial Crisis
The 60/40 lost about 32% peak-to-trough. Bonds helped, but with 60% in equities, the damage was severe. All Weather held up much better, losing around 12%—long bonds rallied hard as a deflationary hedge. The Golden Butterfly fell roughly 14%, with gold and long bonds partially offsetting equity losses.
2022 Rate Hiking Cycle
This was the nightmare scenario for bond-heavy portfolios. The 60/40 lost about 17% as both stocks and bonds fell simultaneously. All Weather, with its 55% bond allocation, suffered similarly—down around 15%. The Golden Butterfly fared somewhat better at -11%, because gold rallied and short-term bonds held their value while long bonds collapsed.
The 2022 experience is critical. It revealed that the All Weather portfolio’s heavy bond dependence is a structural risk in rising-rate environments. The Golden Butterfly’s split between short and long bonds provided better resilience.
1970s Stagflation
In high-inflation environments, the Golden Butterfly’s 20% gold allocation and small-cap value tilt give it a significant edge. All Weather’s commodity exposure helps but its bond-heavy tilt hurts. The 60/40 suffers as both stocks and bonds deliver poor real returns.
Who Is Each Portfolio Best For?
60/40: The Growth-Focused Investor
Best for investors who want simplicity, have a long time horizon (15+ years), and can stomach a 30%+ drawdown without panic-selling. It is the right choice if you believe equities will continue to outperform over the long run and you do not need the money for decades. It is also the easiest to implement: two funds.
All Weather: The Volatility-Averse Investor
Best for investors who prioritize consistency above all else—those who would rather earn 8% with small drawdowns than 10% with terrifying ones. Retirees, those within 5 years of retirement, or anyone who knows they would sell in a panic during a 30% crash. The trade-off is real: you give up meaningful return for that smoothness.
Golden Butterfly: The Balanced Investor
Best for investors who want the best risk-adjusted returns and are willing to hold five funds instead of two. The Golden Butterfly consistently shows the highest Sharpe ratio of the three. Its diversification across economic regimes (growth, deflation, inflation) is more robust than either alternative. If you can rebalance annually and hold gold without second-guessing it, this is arguably the strongest fixed portfolio available.
How to Implement Each
60/40
- 60% VTI (Vanguard Total Stock Market) or SPY (S&P 500)
- 40% BND (Vanguard Total Bond) or AGG (iShares Core Aggregate Bond)
All Weather
- 30% VTI
- 40% TLT (iShares 20+ Year Treasury)
- 15% IEI (iShares 3-7 Year Treasury)
- 7.5% GLD (SPDR Gold)
- 7.5% DJP (iPath Bloomberg Commodity) or PDBC
Golden Butterfly
- 20% VTI
- 20% AVUV (Avantis US Small Cap Value) or VBR
- 20% TLT
- 20% SHY (iShares 1-3 Year Treasury) or VGSH
- 20% GLD or IAU
Fixed vs Tactical: Should You Consider TAA Instead?
Fixed portfolios have one major advantage: they require almost no effort. Rebalance once a year and forget about it. The disadvantage is that they have no mechanism to reduce exposure during prolonged bear markets.
Tactical asset allocation strategies like GEM, HAA, or Vigilant can reduce drawdowns further by moving to cash or defensive assets when trend and momentum signals deteriorate. The trade-off is that TAA requires monthly attention (or a platform that computes signals for you) and will underperform in raging bull markets where staying fully invested is optimal.
Many sophisticated investors combine both approaches: a fixed-allocation core (say 60% of the portfolio in Golden Butterfly) plus a tactical sleeve (40% in a blended TAA strategy). BestFolio tracks both fixed and tactical strategies, making it possible to compare and combine them in a single dashboard.