The permanent portfolio strategy is experiencing its strongest performance in decades, according to a recent analysis from Bank of America. This alternative investment approach, which equally divides assets between stocks, bonds, gold, and cash at 25% each, delivered an impressive 23% return in 2025, marking its best single year since 1979.
The portfolio has also achieved an average annual return of 8.7% over the past decade, representing its best 10-year stretch since the early 1990s. Bank of America highlighted this strategy as a compelling alternative for investors reconsidering the traditional 60/40 portfolio allocation of stocks and bonds.
Why the Permanent Portfolio Outperformed
The strong performance can be attributed to gains across multiple asset classes in 2025. According to the bank’s analysis, the S&P 500 rose 15%, while the 10-year Treasury yield dropped from approximately 4.7% to 4.2%, boosting bond values.
Additionally, gold surged by 65% during the year, and cash-equivalent investments such as short-term Treasury notes yielded between 3.8% and 4.3%. This diversification across uncorrelated assets helped the permanent portfolio capture returns from multiple market conditions simultaneously.
Recent Market Volatility
However, some components of the permanent portfolio have faced recent challenges. Gold prices dropped 12% in a single trading session on Friday, though the precious metal remains positive year-to-date.
Meanwhile, equity markets have continued edging higher despite broader market uncertainty. These short-term fluctuations underscore the portfolio’s design to weather volatility through diversification.
How to Access Permanent Portfolio Exposure
Investors can gain exposure to the permanent portfolio strategy through various exchange-traded funds. Bank of America noted that suitable options include the SPDR S&P 500 ETF Trust for equity allocation, the BondBloxx Bloomberg Ten Year Target Duration US Treasury ETF for bonds, SPDR Gold Trust for precious metals exposure, and the iShares 0-3 Month Treasury Bond ETF for cash equivalents.
These ETFs allow investors to construct a portfolio matching the 25/25/25/25 allocation without purchasing individual securities. The approach provides built-in rebalancing opportunities as different asset classes perform differently over time.
Alternative Portfolio Strategies Gaining Attention
In contrast, other investment firms have proposed different modifications to traditional asset allocation. Vanguard recently suggested investors consider flipping the classic 60/40 mix to place 60% in bonds and 40% in stocks.
The investment management giant has maintained a bullish stance on fixed income over the past year. In August, Vanguard even recommended that some investors consider allocating as much as 70% to bonds amid predictions of lackluster stock returns in coming years.
Growing Interest in Portfolio Diversification
The renewed focus on the permanent portfolio reflects broader investor concerns about concentrated equity exposure. With stock valuations at elevated levels and economic uncertainty persisting, many investors are exploring strategies that spread risk across multiple asset classes.
The permanent portfolio’s equal-weight approach ensures no single asset class dominates performance, potentially reducing overall portfolio volatility. This balanced structure has historically provided downside protection during market downturns while capturing upside from various market environments.
As markets continue to navigate uncertain conditions, investor interest in alternative allocation strategies like the permanent portfolio is likely to grow. The approach’s recent performance may prompt additional financial institutions to evaluate and recommend similar diversified strategies to clients seeking to reduce portfolio concentration risk.
