Abstract

Background: The Permanent Portfolio is a portfolio strategy by Harry Browne. The portfolio is constructed to withstand four economical states, inflation, deflation, prosperity and recession. This in order to in order to not lose a large portion of the portfolio value during any event which could have impact on one of the investments. Browne had found that at least one of the assets gold, stocks, long- and short-term bonds would increase in value during any of the economic states.

Purpose: The purpose of this thesis is to apply the permanent portfolio on the Swedish market, and to see if it can be improved.

Method: This study has back tested returns of Browne’s four recommended assets and four additional assets over a 20-year period and also a 10-year period. The results have been analyzed with financial ratios such as Sharpe ratio and Jensen’s Alpha.

Conclusion: The Permanent portfolio strategy successfully achieves its purpose on the Swedish market. The portfolios leaves rooms for improvements on Browne’s basic strategy, by altering weights and including other assets.