Overview of the RPC Portfolios
Part of my mission here at Risk Parity Chronicles, whether in the first blog version or this Substack version, has been to track realistic portfolios, both Risk Parity-influenced and traditional.
I had fourteen portfolios in the last iteration, but realized that that was a bit too many, and there were some overlaps. So, I went back to the drawing board, and came up with ten to follow.
I think about these ten in a few ways. First, I have four benchmark portfolios, or ones that I track to have something to compare against. I then have six experimental portfolios that have been created to test out against those benchmarks.
Second, I have five that I would consider appropriate for accumulation, and five that are more appropriate for decumulation. It is a bit of a sliding scale, as it’s really only at the extremes that it’s obvious. In the future, once I have some longer data, I’ll be able to look at each portfolio’s volatility and see how much each one moves, but for now, I am using nominal portions devoted to equities as my differentiator.
Third, I have a group of three portfolios which are essentially the same breakdowns of asset classes, just with different amounts of leverage in them. The Unstacked Breakfast is basically 50% equities and 50% diversifiers, with no leverage. The Short Stack has the same proportions, but by taking advantage of capital efficient funds, I can add +40% of additional leverage to turn it into 70% stocks and 70% diversifiers (if this is confusing, I’ll explain more later). The Tall Stack is the Unstacked with 80% additional leverage, to make it an 90/90, while still equally split between equities and diversifiers.
Fourth, I have another set of three portfolios that are connected to each other. There is a 100% equity portfolio (the Equity Triangle), then there is basically the same with +22% of leverage (The Triangle and 22) and then there is the Shannon’s 50/50 portfolio, which is 150% equities and 50% short-term bonds cash equivalent. That portfolio is a bit of an outlier and I really don’t expect anyone to hold it; it is included just to show Shannon’s Demon at work. It’s in second place as I write this, though, so make of that what you will.
The Portfolios:
A table showing the ETFs that make up each portfolio is available here
Golden Butterfly: Great example of a low-risk, Risk Parity-influenced portfolio. Has 40% in equities (divided between large-cap and small-cap value), 20% in fixed income (long-term), 20% in cash equivalent that roughly mirrors the return of short-term bonds, and then 20% in Gold. Note: this is not the exact portfolio recommended by its creator, Tyler, at Portfolio Charts, but pretty close and reflects my preferences for funds.
10x10 Stability: One of my old RPC portfolios. This one has ten funds, each at 10% each, with no leverage and is designed as a stable decumulation portfolio. Winds up as 40% equities, 20% fixed-income, then 10% each of trend, gold, commodities and a short-term bonds/cash equivalent.
Unstacked Breakfast: One of the group of three, this is the one without leverage and designed for decumulation. It is 50% equities plus 50% diversifiers, with the diversifiers of bonds, gold, trend, commodities, and cash. Think of this as a good ol’ all-around breakfast of eggs, bacon, sausage, grilled tomatoes, and toast - just no pancakes.
Classic 60/40: Not much to see here, just the classic of portfolios. It’s something to benchmark against.
Short Stack: Take the Unstacked Breakfast and add in 40% additional leverage by using four Return Stacked funds: RSSB, RSST, RSSY and RSSX. These each have a 100% allocation to stocks AND use options to gain 100% exposure to another strategy or asset class (bonds, trend, carry, and gold/bitcoin respectively). This is of a “have your cake and eat it, too” type of portfolio, as it has 70% exposure to equities, plus 70% exposure to things designed to move differently than equities. The name is a nod to the Return Stacked strategy and should evoke the idea of a short stack of pancakes that you get right on top of your breakfast mentioned above.
Tall Stack: Dial the short stack up a bit, and you get the tall stack, with 80% additional leverage. This one uses higher allocations to those three Return Stacked funds, plus exposures to two 3X leveraged funds (UPRO and TMF) to create a portfolio that functions as 85% equities and 85% diversifiers. Think of this one like the tall stack of pancakes on top. By the way, this is not one that I would recommend for the average Joe or Jane. I dialed up the leverage higher than I would recommend in good conscience, just to see if it works.
Equity Triangle: My basic portfolio for someone in the accumulation stage who doesn’t want to touch any leverage. This is 100% equities, divided equally between US large-cap Growth, US small-cap Value, and an all-around international index fund. You’ll see this one in comparison to two others below which take the basic concept and push it in new directions.
Triangle and 22: This one plays off of the equity triangle by replacing one of the funds (IWY, the US large-cap Growth fund) with a proportional exposure to UPRO, that triple leveraged son-of-a-gun, and then using the extra 22.2% to invest in CAOS. That is one of my favorite funds, and is essentially an equivalent for short-term bonds with an added element of tail-risk protection. The total equity of this portfolio exposure is still 100%, though you get an extra 22.2% in an ultra-safe asset.
10x10 Growth: Another one of my old RPC portfolios, this one is born of the same principle as the 10x10 Stability, with ten funds at 10% each. With leverage used in some of those funds, however, this one is more suited to the accumulation stage since it winds up with an effective exposure to stocks of 100%. It also has some diversification built in, though, with an effective 50% to diversifiers. Two of these diversifiers are gold and Bitcoin, in the form of RSSX, Return Stacked’s new fund combining stocks and a gold/bitcoin strategy. This last part is complicated, and I’ll cover it in a future post though you can read more here. Note, RSSX just launched in May of 2025, so I used it starting in July after initially investing in GDE for this strategy.
Shannon’s 50/50: Another portfolio that is really just an experiment; I wouldn’t expect anyone in the world to actually use this. It is 50% UPRO and 50% CAOS, so in a way it is 150% equities and 50% cash, but then again, the cash can be set off against the leverage in the equities part, so in a sense it's also just 100% equities. Lots of volatility with this one, which should allow us to see the impact of volatility drag (the way in which leverage increases volatility and can have a negative impact on total return), but also of how strategic rebalancing can have a positive effect.
Portfolio Management
Here are my procedures for how I manage them (with a longer explanation here, if you want it):
All portfolios started on July 1st, 2024, each with $1,000,000.
I track them quarterly, so will publish their performance in early January, April, July, and October.
I apply the 4% rule to each portfolio, meaning I am taking out 4% annually from the portfolio to simulate living expenses. Since I look at the quarterly, this amounts to 1% per quarter. This number is inflation-adjusted, and so rises a bit each quarter.
How and where I take the quarterly withdrawals from is a little complicated, but basically, first it is any dividends and then it's the two asset classes most above their target allocation. It's explained more in the link just above.
I have a 20% relative rebalancing threshold. I check each quarter and see if rebalancing is needed, then proceed, following the rules set out in the longer explanation.
Performance
I’ll publish the quarterly portfolio reviews when the time is right (so the next one will be in early October), but since I have been keeping track of them since July 2024, I might as well provide the data for those interested. For posterity’s sake, here they are:
Quarter 2, 2024 (July) - Just the starting amounts.
Quarter 3, 2024 (October) - Golden Butterfly the best.
Quarter 4, 2024 (January) - Shannon’s 50/50 wins the quarter, and 1st overall.
Quarter 1, 2025 (April) - Quarter: Unstacked; Overall: Golden Butterfly.
Quarter 2, 2025 - Shannon’s 50/50 wins the quarter; Equity Triangle 1st overall.