All-Weather Portfolio: the Risk X-Ray
Ray Dalio designed the All-Weather allocation so that no single economic season, growth, recession, inflation or deflation, could sink the portfolio. The striking choice is how little equity it holds: 30%, with 55% in Treasuries doing the heavy lifting. The point of the analysis below is to check whether that promise holds in the actual numbers: where the risk really sits, and how much the bond wall actually decorrelates from stocks in the current regime.
Ray Dalio, popularized in Tony Robbins's Money: Master the Game (2014)
Analysis as of Friday 2026-08-28 · recomputed weekly from daily market data · methodology
What the All-Weather Portfolio holds
The published allocation: 30% total US stocks, 40% long-term Treasuries, 15% intermediate Treasuries, 7.5% gold, 7.5% commodities.
| Fund | Measured role | Weight | Expense ratio |
|---|---|---|---|
| VTI Vanguard Total Stock Market ETF | diversifier | 30% | 0.03% |
| TLT iShares 20+ Year Treasury Bond ETF | correlated core | 40% | 0.15% |
| IEF iShares 7-10 Year Treasury Bond ETF | correlated core | 15% | 0.15% |
| GLD SPDR Gold Shares | shock absorber | 15% | – |
Dalio's original splits the real-asset sleeve into 7.5% gold and 7.5% broad commodities. PairBook covers no broad-commodity ETF, so this implementation puts the full 15% in gold (GLD), which is also the most common retail simplification.
Where the risk actually sits
Measured through the covariance matrix, TLT dominates the risk budget at 47.4% of total risk for 40.0% of capital; at the other end, IEF accounts for only 8.3%.
| Fund | Share of risk | Risk | Capital | Beta | Role |
|---|---|---|---|---|---|
| TLT | 47.4% | 40.0% | 0.11 | correlated core | |
| VTI | 29.9% | 30.0% | 1.01 | diversifier | |
| GLD | 14.4% | 15.0% | 0.18 | shock absorber | |
| IEF | 8.3% | 15.0% | 0.04 | correlated core |
How the pieces move together
TLT + IEF move as one block (average correlation 0.95): together they are 55.0% of the capital and 55.7% of the risk.
| Holding | VTI | TLT | IEF | GLD |
|---|---|---|---|---|
| VTI 30% | 1.00 | |||
| TLT 40% | 0.13 | 1.00 | ||
| IEF 15% | 0.11 | 0.95 | 1.00 | |
| GLD 15% | 0.14 | 0.13 | 0.16 | 1.00 |
Pearson correlation of weekly returns · 156-week common window ending 2026-08-28 · pairbook.io
The worst it would have been
Over the analysis window, this mix would have fallen at worst -7.3% (from the week of 2023-09-15 to 2023-10-27), shallower than the S&P 500's -16.9% over the same weeks, and it has since recovered that peak.
Worst weeks of the mix: -2.6% (week ending 2023-10-27), -2.5% (week ending 2024-11-22), -2.5% (week ending 2026-03-27).
FAQ
Why does the All-Weather hold only 30% stocks?
Dalio balances risk rather than capital: stocks carry roughly three times the volatility of bonds, so a small stock allocation still contributes a large share of the risk. The risk-contribution table above shows exactly how that plays out with live data.
Is the bond-heavy design still protective when rates rise?
That is the classic critique: when stocks and long Treasuries fall together, as in 2022, the diversification breaks precisely when it is needed. The correlation figures above are measured on the last three years, so they reflect the current stock-bond regime rather than the historical average.
Run this analysis on your own portfolio
The same X-ray, risk contributions, correlation blocks, ETF overlap, runs on any mix of 4,700+ US stocks and ETFs: paste your holdings into the free portfolio X-ray, or ask an AI assistant with the PairBook MCP server.
