Permanent Portfolio is a self-directed long-term passive investment strategy, introduced in 1981 by Harry Browne and Terry Coxon and simplified into 4 asset class in 1987. It aims to provide consistent market returns and protections in different economic cycles of growth, inflation, recession and deflation. The strategy does not rely on market timing, and requires yearly management and minimal monitoring. This site is to provides educational information for learning about my research and implementation of Singapore version of Permanent Portfolio. Readers can also use the Permanent Portfolio knowledge to diversify their stock heavy portfolio into long term government bonds and gold for better portfolio protections in recession, deflation and inflation. Disclaimer: Use of information on this site represents acceptance of the disclaimer at bottom of this page and Disclaimer page.

Monday, 30 July 2012

Can unit trusts/mutual funds be used for the assets found in Permanent Portfolio

Can unit trusts/mutual funds be used for the assets found in Permanent Portfolio?

Generally no, unless you really have no choice. Unit Trust have typical high management fee of 0.75% to 2.5% - that’s a rough average of 1.5% less profit per year. Over 25 years that accumulative 1.5% less profit per year could lower your portfolio returns by about 31.5%! Imagine getting 30% to 40% less than what you could have! Search online for the relevant maths, compound interest works in reverse too. If you wish to implement your own Permanent Portfolio, you should be savvy enough to directly invest in passively managed index funds, ETF, bonds, gold and Short-term Treasuries instead. I liquidated my unit trust investments and put the cash into my Permanent Portfolio instead - I expect my Permanent portfolio to do better than my previous unit trusts investment and it did. Also note that unit trust or funds consisting of gold mining companies cannot be used in place of gold commodity itself.

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