🏆Ray Dalio's All-Weather Portfolio: Building a Legendary Strategy with Simple ETFs

In partnership with

Welcome back to our Legendary Portfolio Series! After exploring the investment philosophies of Warren Buffett, Peter Lynch, and other titans, we now turn to Ray Dalio, a prominent figure on Wall Street.

Dalio is the mastermind behind Bridgewater Associates, the world's largest hedge fund, managing over $100 billion. He stands out for his consistent returns and talent in simplifying complex economic principles into frameworks that everyday investors can use. He has become a modern philosopher of investing, with his bestselling book Principles selling millions worldwide. His economics and personal development insights have influenced many, from college students to Fortune 500 CEOs.

Today, we will explore how to implement Dalio's "All-Weather" portfolio strategy using accessible ETFs. This will provide a masterclass from one of the world's top investors without needing a billion-dollar minimum investment.

The Daily Newsletter for Intellectually Curious Readers

Join over 4 million Americans who start their day with 1440 – your daily digest for unbiased, fact-centric news. From politics to sports, we cover it all by analyzing over 100 sources. Our concise, 5-minute read lands in your inbox each morning at no cost. Experience news without the noise; let 1440 help you make up your own mind. Sign up now and invite your friends and family to be part of the informed.

Join for free today!

🎯The All-Weather Philosophy: Investing for Every Season

Ray Dalio's All-Weather portfolio is built on a simple idea: nobody can consistently predict what will happen in the economy. Instead of trying to time the market or guess how interest rates will move, why not build a portfolio that can weather any storm?

The All-Weather approach is like a versatile wardrobe suitable for any season. Just as you wouldn't wear only winter coats or summer shorts, you shouldn't limit your investment portfolio to a single economic environment. Ray Dalio's strategy is designed to perform well during inflation, deflation, economic growth, or recession. His extensive research on economic history revealed that many investors create portfolios that only work in current conditions. The All-Weather portfolio effectively addresses this issue.

• ⚖️Risk Parity Focus: Rather than allocating money based on dollar amounts, Dalio balances risk contributions across different asset classes.

• 🌐Economic Environment Agnostic: The portfolio is designed to perform in any economic scenario – growth, recession, inflation, or deflation

• 🌍Diversification Beyond Stocks: Unlike traditional 60/40 portfolios, the All-Weather strategy includes meaningful allocations to commodities

• 🔀Low Correlation Assets: Each holding is chosen to behave differently from the others, reducing overall portfolio volatility

• 🕰️Long-Term Perspective: The strategy prioritises steady, consistent returns over short-term performance

• 🧪Evidence-Based Approach: Every allocation decision is backed by historical data and economic logic rather than gut feelings or market predictions

• 🧘Simplicity in Execution: Despite the complex theory behind it, the actual implementation is surprisingly straightforward

Building the All-Weather Portfolio with ETFs📊

Now comes the exciting part – how do we build this legendary portfolio using ETFs that regular investors can buy? Dalio's original All-Weather strategy can be beautifully replicated using five simple ETFs, each serving a specific purpose in creating that perfect balance.

1. Vanguard Total Stock Market ETF (VTI) – 30%

VTI $VTI ( ▼ 0.59% ) serves as the growth engine of the All-Weather portfolio, providing exposure to the entire U.S. stock market and the long-term wealth potential of American businesses during economic expansions.

Although a 30% stock allocation may seem conservative compared to the 80% or 90% suggested for young investors, Ray Dalio's strategy emphasises balance and consistency. This allocation enables participation in economic growth while maintaining stability during market downturns.

2. iShares 20+ Year Treasury Bond ETF (TLT) – 40%

TLT $TLT ( ▼ 0.43% ) forms the defensive backbone of the portfolio, holding long-term U.S. Treasury bonds that typically rise in value during economic downturns and deflationary periods when investors seek safety, and the Federal Reserve cuts interest rates.

The 40% allocation reflects the historical reality that deflationary periods and economic slowdowns have been more common and severe than many investors realise. Overweighting this "boring" asset class ensures your portfolio stays afloat when growth assets are sinking.

3. iShares 3-7 Year Treasury Bond ETF (IEI) – 15%

$IEI ( ▼ 0.15% ) provides stability and income through intermediate-term Treasury bonds, offering a middle ground between the volatility of long-term bonds and the inflation sensitivity of cash while serving as a reliable source of portfolio ballast.

Think of IEI as the steady middle child of the bond family. It's not as exciting as TLT during dramatic interest rate moves, but it's also not as volatile. This 15% allocation is a stabilising force that provides consistent income and helps smooth out the portfolio's overall performance.

Intermediate-term bonds are particularly valuable because they balance interest rates and inflation risks. They're long enough to benefit when rates fall but short enough that they won't get crushed if inflation starts rising unexpectedly.

4. SPDR Gold Shares (GLD) – 7.5%

GLD $GLD ( ▼ 0.23% ) provides a hedge against currency debasement and extreme economic uncertainty. It typically performs well during inflationary periods and times of geopolitical stress when traditional financial assets may struggle.

Gold has been a store of value for thousands of years and continues to play that role in modern portfolios. The 7.5% allocation might seem small, but gold's job isn't to drive returns—it's to provide insurance against scenarios where everything else goes wrong.

5. iShares S&P GSCI Commodity-Indexed Trust (GSG) – 7.5%

$GSG ( ▼ 0.37% ) exposes a broad basket of commodities, including energy, agriculture, and metals. It offers protection against inflation and benefits from global economic growth while diversifying away from traditional financial assets.

Commodities are the raw materials that make the world go round – oil, wheat, copper, natural gas, and dozens of other essential resources. The 7.5% allocation to GSG ensures your portfolio benefits when these real assets rise in value, typically during inflationary periods or when global economic growth is strong.

💡Great news for investors who value simplicity: The SPDR Bridgewater All Weather ETF $ALLW ( ▼ 0.79% )  has launched, offering access to Ray Dalio's All-Weather strategy in a single, easy-to-purchase fund. This is ideal for beginners or those who prefer a hands-off approach, as the fund automatically maintains allocations, reinvests dividends and handles rebalancing. Although still new, ALLW presents an exciting opportunity for ETF investors seeking institutional-quality strategies without complexity. It could become a core holding for many long-term investors.

📚Cracking Ray Dalio's All-Weather Code

Ray Dalio's All-Weather portfolio represents one of the most thoughtful approaches to long-term investing ever developed. Focusing on balance rather than prediction, diversification across economic scenarios rather than just asset classes, and risk management rather than return chasing offers a blueprint for building wealth that can withstand whatever the future brings.

The ETF implementation we've discussed today makes this legendary strategy accessible to every investor. Whether you build the portfolio using VTI, TLT, IEI, GLD, and GSG or opt for the simplicity of the new ALLW fund, you'll be applying decades of market wisdom and institutional-quality thinking to your personal investments.

Remember, the goal isn't to get rich quickly or beat the market yearly. The goal is to build wealth steadily and consistently over time, regardless of the economic environment. In a world full of uncertainty, having an investment strategy designed to weather every storm is the most valuable thing you can have.

We hope you've enjoyed this weekend's exploration of Ray Dalio's investment philosophy and its practical application through ETFs. The legendary portfolio series continues to demonstrate that the world's most successful investors often succeed not by being the smartest or making the best predictions but by building robust systems that work in any environment.

Join the ETF UNO community, where we continue exploring legendary strategies, analysing new fund launches, and sharing insights that can help you build a better investment portfolio. Until next time, happy investing, and remember – in the world of All-Weather investing, every day is a good day to build wealth!🌉

DISCLAIMER: This article is for informational purposes only and does not constitute investment advice. Always conduct your own research and consider consulting with a financial advisor before making investment decisions.