I am considering the idea of "Harry Browne's permanent portfolio". I seen a few versions of this strategy where the different parts consists of funds which in turn have some costs associated with them.

Then why not just buy one ETF(which only contains the corresponing asset) for each of three parts consisting of government securites and gold and for the last forth just a large stock fund for the stock part?


I hope I understood your question correctly. In case this helps:

1) you can probably cover even the stock part with a combination of just a few ETFs.

2) traditional funds (as opposed to ETFs) will always be promoted much more aggressively, because their providers earn high fees. ETFs are much less profitable for their providers and are often not promoted at all even if they represent a superior solution. This might explain why you see versions with traditional funds, but not ETFs.

I think you are right in thinking that you can construct a "permanent portfolio" type investment portfolio out of ETFs with a superior cost structure. Probably the best way to do it. Industry players who have a vested interest in traditional portfolio management won't tell you this though.

  • $\begingroup$ Is it possible to formulate the major general difference between an ETF with goverment securtites and a "traditonal goverment security fund?" In terms or risks and control over content( i.e weather the manger switches content or not). Or is that to much dependant on the particular ETF and Fund. It dosnt sound reasonable that it would be the same just cheaper. $\endgroup$ – user1 Oct 30 '18 at 11:32
  • 1
    $\begingroup$ In the traditional fund the manager will be switching things around. The ETF will NOT be switching things around. So you are absolutely right. In this respect they are not the same. However, the point is that the switching around is not helping. For equity ETFs, they typically beat 80% of the traditional funds (after fees have been deducted). So you are better off with the ETF in this sense. But yeah, the traditional funds will be switching things around and the ETF won't. If you want switching around go with traditional, if you wan't better returns, go with ETFs ;) $\endgroup$ – M3RS Oct 30 '18 at 11:39
  • $\begingroup$ Right, my brother even told me that there is no room for the manger in an ETF to make any choice at all, they have to do things predefined by the index they follow. In other words that he is obligated to take predefined actions. Is this correct? $\endgroup$ – user1 Oct 30 '18 at 11:53
  • 1
    $\begingroup$ Yes, the way it works is that they track an index. Like the SPDR S&P 500 ETF will track the S&P 500 index and they make changes only to reinvest dividends and to reflect changes in the composition of the S&P 500 (on average every couple of weeks a company will leave or enter the index, so they'll have to buy or sell that). $\endgroup$ – M3RS Oct 30 '18 at 12:01

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.