Increased oil prices, higher inflation, and reduced consumer confidence have been some of the gloomy predictions in the wake of the recent unrest in the Middle East. So now might be a good time to take a closer look at All Weather funds, long praised for their risk resilience. Pioneered by billionaire Ray Dalio’s Bridgewater Associates in the 1990s, the portfolio strategy has enjoyed a fair bit of limelight this year, thanks to a new ETF that makes it available to a wider range of investors.
All Weather ETF – Strength in Diversity?
In March, Dalio launched the SPDR Bridgewater All Weather ETF (ALLW) – an exchange-traded fund designed “to shield investors from market volatility” by drawing on the All Weather model. This emphasises a proportionally lower investment in conventionally riskier stocks than traditional vehicles do.
State-Street Global Advisors (SSGA), who partnered with Bridgewater in the ALLW launch, said it hoped the ETF would offer a diversified portfolio of assets “beyond just stocks and bonds”, with exposure to commodities and gold as well.
“By balancing risk across assets that do well in different economic environments, an All Weather approach seeks to grow wealth with equity-like but more stable returns over time – without trying to predict the future,” says SSGA.
Beating the 60/40 Portfolio Split
Self-styled “guru investor blog” Validea seems to agree that in uncertain times the All Weather funds model is a safer bet than the more conventional 60/40 stock-bond portfolio split.
“While the All Weather Portfolio may lag during strong bull markets, its true strength lies in its resilience during downturns,” it says.
That said, a glance at Validea’s own figures suggests that so far this year All Weather funds have lagged behind the 60/40 model – posting just 1.2% returns YTD as at early June, in comparison to 1.7%.
That hasn’t stopped Validea from endorsing All Weather, although it remains to be seen how well it stands up to turmoil in the Middle East – and any other nasty surprises – in the second half of this year.
“The All Weather Portfolio isn’t designed to outperform every year,” says Validea. “Instead, it’s built to perform reasonably well across a wide range of market conditions – and more importantly, to help investors stay invested during turbulent times.”
Pointing to key performance indicators in 2008 and 2011 – both crisis years for the global economy when All Weather outperformed 60/40 by significant margins – Validea concludes: “For those seeking a diversified, rules-based approach that doesn’t rely on predicting economic outcomes, the All Weather Portfolio offers an evidence-backed framework worth considering.”
Wall Street Rewards All Weather
Markets at the time of writing seem broadly to share Validea’s confidence. On June 21, TradeAlgo, which claims to process more than 50 billion price-related events daily, said Wall Street had rewarded investors who spread their assets in the first half of 2025.
“Investors who resisted the urge to over-concentrate in trendy sectors like Big Tech and instead spread their exposure across multiple asset classes have seen some of the strongest relative performance in years,” it says.
“With the market sending mixed signals, many professionals are choosing not to take strong directional stances. Instead, they’re focusing on maintaining portfolios that can endure a range of outcomes – a so-called ‘all-weather’ approach.”
All Weather Beats the Morgan Stanley Average
Plato Investment Management is no less bullish when assessing its own version of the Bridgewater strategy, which it describes in its 2025 All Weather Alpha Report as “focusing on consistent outperformance”.
In February it claimed its All Weather Alpha had outperformed the Morgan Stanley Capital International (MSCI) global trading average by 11.1% since its launch in 2021. Plato boasts more than $18 billion assets under management (AUM) as at the end of 2024.
All Weather for All Investors?
So who is betting big on All Weather portfolios? If SSGA’s testimony is anything to go by, big players – although specific details of investors are hard to come by.
“Bridgewater’s All Weather strategy has been held by large institutions and ultra-high-net-worth investors since its inception,” it says.
But thanks to the recently launched ETF that could be changing, with All Weather funds no longer the exclusive preserve of the mega-rich.
“For decades, Dalio’s strategy was available only to big-money institutions and the ultra-wealthy,” says Finimize. “But the recent launch of the SPDR Bridgewater All Weather ETF has changed that, allowing everyday investors to access the portfolio in a tax-efficient, low-cost way.”
The Funds Society concurred, describing ALLW in April as “a fund that brings the ‘all weather’ strategy approach within reach of retail investors seeking resilience for their portfolios during market turbulence”.
Ray Dalio’s Golden Idea
Dalio’s brainchild, All Weather funds were inspired by the unexpected spike in gold prices after then US president Richard Nixon took the dollar off Bretton Woods in 1971.
Dalio founded Bridgewater Associates four years later to provide risk consulting to corporate clients. In Bridgewater’s own words, the Nixon decision to decouple the dollar from gold, and its subsequent impact, had “transformed Ray’s thinking about markets”.
Dalio distilled the next twenty years of this strategic thinking about long-term risk and how to manage it into the All Weather model, launched in 1996.
Four Principles Behind All Weather
“In essence, All Weather can be sketched out on a napkin,” says Bridgewater. “It is as simple as holding four different portfolios each with the same risk.”
Each of these is designed to do well in one of four specific investment environments – when inflation or growth either rises or falls “relative to expectations”. By spreading assets across these quartiles, so the theory goes, investors have a portfolio well prepared to weather the long-term vicissitudes of the market.
Rather than predict the future, the All Weather strategy seeks to prepare the investor against multiple possible outcomes over the long term.
“With the All Weather approach to investing, Bridgewater instead accepts the fact that they don’t know what the future holds, and thus choose to invest in balance for the long-run,” it says.
The Past is a Different Country
Given how unpredictable global events have proven to be over the past decade alone, this definitely seems wise. But, as always, it’s important to bear in mind that no one can truly predict whether All Weather funds will continue to prove resilient over time.
Or as Plato sums up in its report footnotes: “Past performance is not a reliable indicator of future performance.”
Author: Damien Black
The editorial team at #DisruptionBanking has taken all precautions to ensure that no persons or organizations have been adversely affected or offered any sort of financial advice in this article. This article is most definitely not financial advice.
#CapitalMarkets #AllWeather #Investors #MarketConfidence
See Also:
‘The 60/40 Model Is Dead’: Is Larry Fink Right? | Disruption Banking
How ARR’s Long / Short Equity Strategy Delivers Returns During a Market Crash | Disruption Banking
Alternatives in your Retirement Plan with Alto | Disruption Banking
