The Golden Butterfly

Tyler, founder of Portfolio Charts is a mechanical engineer with a strong math background and an interest in finance. He developed a portfolio called “The Golden Butterfly.”

The Golden Butterfly, or GB for short, consists of 20% small-cap value stocks, 20% large-cap stocks, 20% long-term Treasury bonds, 20% cash, and 20% gold. It’s built around four general economic cycles and that a certain asset class tends to do well in each of them:

  • Prosperity = Stocks
  • Recession = Cash
  • Inflation = Gold
  • Deflation = Long-term Treasury’s

Golden Butterfly Asset Allocation


The historical performance of the GB is impressive. Tyler analyzed the GB’s performance versus a 100% total stock market portfolio over the last 43 years, and found that “the Golden Butterfly had a nearly identical long-term real compound annual growth rate, but with 60% less volatility, a single worst year of only -11%, and a longest drawdown of only two years.”

Those historical returns, plus a lack of volatility, are appealing, although historical returns are not always an indicator of future success.

How can FOLIO do the heavy lifting?

You can use a tool like FOLIO to help you with asset allocation and portfolio management. FOLIO saves you time, with live pricing and benchmarks to track how your asset allocation changes over time. You can easily use this reporting to then rebalance your portfolio the way you want, while also understanding the net worth and your financial situation. All of this is shown on our comprehensive dashboards.

If you’re looking to take control over your investments while also monitoring your net worth, then you need to give FOLIO a try.


Source: Drew Housman, The Simple Dollar