4-3-2-1 Dragon at a glance
4-3-2-1 Dragon is a fixed-allocation portfolio by Community Research across US Equity, US Small-Cap Value, Managed Futures, Long Zero-Coupon Treasuries, rebalanced quarterly. Backtested 1986-06-30 to 2026-07-03 (40.0 years): 8.9% CAGR, 1.13 Sharpe, -19.6% max drawdown, 7.9% volatility.
- Type
- Fixed Allocation
- Author
- Community Research
- Rebalancing
- Quarterly
- Risk
- Moderate
- Period
- 1986-06-30 to 2026-07-03
- CAGR
- 8.9%
- Sharpe
- 1.13
- Max Drawdown
- -19.6%
- Volatility
- 7.9%
4-3-2-1 Dragon — Fixed Allocation Portfolio
The 4-3-2-1 Dragon is the community's retail-friendly distillation of Chris Cole's Dragon Portfolio (Artemis Capital, 2020). Cole's original allocation is 24% Equity, 18% Fixed Income, 19% Gold, 18% Commodity Trend, and 21% Active Long Volatility. The Active Long Volatility sleeve uses long-dated equity options and tail-risk strategies that are not available in a retail ETF wrapper, so the community substituted a larger managed-futures sleeve and a small-cap value tilt that approximates the regime diversification at the cost of giving up the explicit long-vol exposure.
This implementation runs 30% SPY, 10% AVUV (small-cap value), 30% KMLM (managed futures for crisis alpha), 20% ZROZ (long zero-coupon treasuries), and 10% GLD. Quarterly rebalance. Variants include a 1.5x capital-efficient version using NTSX/GDE substitutions, and a 2x leveraged version using UPRO/TMF/UGL.
4-3-2-1 Dragon: frequently asked questions
- What is 4-3-2-1 Dragon?
- Multi-asset all-weather allocation inspired by the Artemis Dragon Portfolio: equities + small cap value + managed futures + long zero-coupon treasuries + gold. The 4-3-2-1 ratio balances growth and crisis alpha.
- Who created the 4-3-2-1 Dragon strategy?
- 4-3-2-1 Dragon was developed by Community Research. It is based on Cole, C. (2020). The Allegory of the Hawk and Serpent. Artemis Capital Management..
- What is the historical return and maximum drawdown of 4-3-2-1 Dragon?
- Backtested from 1986-06-30 to 2026-07-03, 4-3-2-1 Dragon returned 8.9% CAGR with a -19.6% maximum drawdown and a Sharpe ratio of 1.13. Past performance does not guarantee future results.
- How often is 4-3-2-1 Dragon rebalanced?
- 4-3-2-1 Dragon is rebalanced quarterly. BestFolio publishes the updated allocation signal each period.
- Is 4-3-2-1 Dragon a fixed or tactical strategy?
- 4-3-2-1 Dragon is a fixed-allocation (strategic) portfolio: it holds a set allocation and rebalances on schedule rather than rotating based on market signals.
Backtest Performance (1986-06-30 to 2026-07-03)
| Metric | 4-3-2-1 Dragon |
|---|---|
| Compound Annual Growth Rate (CAGR) | 8.9% |
| Maximum Drawdown | -19.6% |
| Sharpe Ratio | 1.13 |
| Sortino Ratio | 1.86 |
| Annualized Volatility | 7.9% |
| Calmar Ratio | 0.46 |
| Total Return | 2983.3% |
| Backtest Period | 40.0 years |
Strategy Details
- Type
- Fixed / Strategic
- Rebalancing
- quarterly
- Risk Level
- moderate
- Variants
- 3
- Author
- Community Research
- Source
- Cole, C. (2020). The Allegory of the Hawk and Serpent. Artemis Capital Management.
Asset Classes
- US Equity
- US Small-Cap Value
- Managed Futures
- Long Zero-Coupon Treasuries
- Gold
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