The 4:3:2:1 investment strategy is an all-season portfolio approach with specific asset allocations designed to balance risk and return. It is based on weighting assets according to the average lengths of seasons.
Key Components of the 4:3:2:1 Portfolio
The 4:3:2:1 investment strategy consists of the following asset allocation:
- Stocks: 40% - Aimed at providing growth and capital appreciation.
- Managed Futures: 30% - Designed to capture trends in various markets and act as a diversifier.
- Long-Term Bonds: 20% - Intended to provide stability and income.
- Gold: 10% - Used as a hedge against inflation and economic uncertainty.
| Asset Class | Allocation | Purpose |
|---|---|---|
| Stocks | 40% | Growth and capital appreciation |
| Managed Futures | 30% | Diversification and trend capturing |
| Long-Term Bonds | 20% | Stability and income |
| Gold | 10% | Inflation hedge and economic uncertainty hedge |
This allocation seeks to create a portfolio that can perform well in various economic conditions, similar to an all-weather portfolio. The strategy aims to balance higher-growth assets like stocks with diversifying assets like managed futures, bonds, and gold, creating a resilient and balanced investment approach.
