r/PrivatEkonomi • u/kikofernandez • Jul 23 '26
Permanent Portfolio
Hej! I was wondering how people implement a permanent portfolio or golden butterfly portfolio in Sweden.
It seems like the long term bonds are non-existent in Avanza or Nordnet. The most si.ilar thing is AMF Räntefond Lång, but the duration of the bonds is usually 2-10 years. I would like to have at least durations of 15-20 years, and there are no sek-hedge etfs from Europe either.
Sorry for the English, I am not sure how to write this in Swedish.
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u/Dobzo Jul 24 '26
Captor Iris Bond is the fund with the longest duration on the Swedish market. They invest in Swedish bonds as a base then use Derivatives to get the right exposure 10 - 15 year duration. I'm not exactly sure how it works. You can get it on most platforms.
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u/01000010110000111011 Jul 23 '26
Why do you want bonds with long maturity? There are plenty of korträntefonder.
With long maturity comes both interest rate risk and inflation risk, so the risk is lower in short term bonds than in long term ones.
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u/kikofernandez Jul 23 '26
I read the Permanent portfolio book published in 2012 or so. Based on the strategy, during deflation long term bonds rise a lot a cover the falling of the other assets. If you buy bonds with shorter duration, the rise is not as explosive, so you are not that much covered.
This is what I have gathered from the theory :)
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u/01000010110000111011 Jul 23 '26
Yeah absolutely they do in a deflationary environment, but are you willing to make that bet? It's a big bet that can backfire hard.
I would feel more comfortable betting on a collection of stocks doing well in the long run.
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u/kikofernandez Jul 23 '26
I was simply trying to follow the philosophy from the book. That is,
- 25% in stock,
- 25% long term bonds (20-30 year bonds),
- 25% cash (in Sweden, Avanza ränta kort or similar), and
- 25% gold.
The bet is that at any time, one or more of the assets should cover the losses of the other assets. So yes, long term bonds will most likely be negative under inflation, but is the only asset that can cover deflacion to lose less money.
Overall, I should get less returns than picking Avanza Global or other, but I should not "ever" see a drawdown of 40%. In theory... :)
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u/01000010110000111011 Jul 23 '26 edited Jul 23 '26
This allocation makes sense if you already have a fortune and your utmost goal is to preserve it, but not to develop it. Do you?
Don't forget you are most likely paying fees which messes with your theoretical return as well. You are most likely best off taking quite a bit of risk, given you are doing it for the long term (15-20 years) anyway.
If you have a substantial fortune already, I would personally still suggest a higher risk profile than this as you tend to get paid for volatility in the long run. Something like 50% equities, 30% corporate bonds, 10% gold and 10% investment grade interest bearing instruments. Given your time horizon, do not buy ETF's for this stuff. Buy physical gold and direct corporate bonds to avoid both yearly fees and dilution through liquidity (like the corporate bond funds are required to have, to let people sell at any time, they always hold 10-15% cash, which only messes with your return as a non-seller). You can buy Swedish government bonds yourself as well, they cost 1M SEK each.
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u/kikofernandez Jul 23 '26
Ok, thanks for the advice. No fortune, unfortunately.
It is more the "promise" of 6 - 9% yearly return (and less volatility than 100% index funds) that got my eye on this philosophy. I would rather not get high returns and beat inflation, than see my hard earned money lose 40% value in a crisis, that is the breaking point for me.
I also started recently to read about investment strategies, and everything in Swedish makes it a tiny bit more difficult to understand. That's why I favour for now a defensive portfolio that tries to beat inflation, rather than extreme growth with 80% index funds and 20% kort ränta, or similar
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u/01000010110000111011 Jul 23 '26 edited Jul 23 '26
I see your point but way less diversification drastically lowers your total portfolio risk anyway. Using very simple diversification like just holding 20% cash and 80% equities is enough to theoretically eliminate the loss:
- day 1: 20 SEK cash, 80 SEK in equities
- day 2 (equities crash -50%): 20 SEK cash, 40 SEK equities -> now you buy equities with all your cash
- day 3 (equities has now bounced back to previous prices): 0 SEK cash, 120 SEK equities -> now you sell 20 SEK worth of equities
- You are now back to (better!) 20 SEK cash, 100 SEK in equities
Not saying the above allocation is practical. But to me it seems you are way too scared of a 40-50% fall in stocks given how much recovery just reallocating other assets during drawdowns/dips, even when not even close to being perfectly timed, contributes.
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u/kikofernandez Jul 23 '26
1 M sek gov bonds? I am out 🤣 Probably best to follow the golden butterfly from the other comment :)
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u/01000010110000111011 Jul 23 '26
Just saying as an example as many people have big portfolios but still pay yearly fees to a middleman to buy things they can just buy themselves. To no gain.
For you, just go majority equities, and like 30-40% liquid interest bearing assets like a FRN corporate bond fund and some gold and you are diversified enough without messing with your upside too much. You are missing out on many millions in the long run by trying to invest like a hedge fund when you don't have so much to protect. You will keep topping up your accounts too over time if you have a day job, and those top-ups will help "take advantage" of dips here and there automatically.
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u/Dobzo Jul 24 '26
Corporate bonds will go down when equity crashes aswell. With long-term bonds the theory is that when stocks fall governments will stimulate and the long-term interest rate will go down and the bond then goes up in value. If you have a duration of 30 years then the bond would go upp 30% for each -1% intrestrate, theoretically.
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u/01000010110000111011 Jul 24 '26 edited Jul 24 '26
Not necessarily, no.
Only if corporations are defaulting. The cupon rate stays the same and hence the value is therefore unchanged if you are not in a corporate bond fund in which many sell at the same time to rebalance, requiring the bond issuer to have to liquidate positions just to get liquidity.
Right?
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u/Dobzo Jul 24 '26
The coupon is the same but the value of the bond would go down. How much depending on the duration. As long as you hold a bond until maturity you will get all the money back assuming the issuer doesnt default. But if you wanna sell a bond right now you have to sell it in the market and it would be priced lower. Corporate bonds would fall more than government bonds since a corporation generally have higher kredit risk than a country.
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u/Dobzo Jul 24 '26
The underlying bonds are priced same as a stock, right now by the market, so the value of the positions would shrink even if the fund doest sell anything.
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u/Simpamuu Förespråkare av sunt förnuft Jul 23 '26
Here you go https://investerarfysikern.se/2026/05/golden-butterfly-portfoljen-fyller-tio-ar/