Ray Dalio’s All Weather portfolio vs 60:40 portfolio: Which delivered better returns over 15 years in India?

Indian investors looking to reduce stock market risk face a familiar dilemma. Portfolios heavily invested in equities can generate strong long-term returns, but sharp market corrections can erode wealth and test investors’ patience. Adding debt and gold can cushion some of those losses, though it may also limit gains when equities rally.

A backtest by Zerodha Varsity examined whether Ray Dalio’s All Weather portfolio, designed to perform across different economic conditions, could offer a smoother investment journey for Indian investors. The analysis compared the strategy with a traditional 60:40 portfolio, which allocates 60% to equities and 40% to debt, as well as an all-equity Nifty 500 total returns index (TRI) portfolio.

The results, covering February 2011 to September 2026, show that the All Weather portfolio delivered an average annual return of 9.9%, below the 10.4% returned by the 60:40 portfolio and the 12% generated by the Nifty 500 TRI. Its advantage was lower volatility and smaller losses during market downturns.

How did the three portfolios perform?

The All Weather portfolio spreads investments across equities, government securities and gold. The 60:40 portfolio has a higher equity allocation, while the Nifty 500 TRI represents a fully equity-invested strategy.

The comparison shows the trade-off between higher returns and lower portfolio volatility.

An investment of ₹1 lakh in the All Weather portfolio would have grown to approximately ₹4.4 lakh over the period, compared with ₹4.7 lakh in the 60:40 portfolio and ₹5.9 lakh in the Nifty 500 TRI.

The difference becomes more pronounced when volatility and drawdowns are considered. The All Weather portfolio’s reported volatility was 5.7%, compared with 10.5% for the 60:40 portfolio and 17.5% for the Nifty 500 TRI. Its biggest fall from a peak was 6.4%, against 17.6% for the 60:40 portfolio and 31.8% for the Nifty 500 TRI.

This suggests that investors who prioritise limiting portfolio swings may find diversification useful, even if it means accepting lower returns than a pure equity strategy over some periods.

How did the portfolios perform during market downturns?

The difference between the strategies was also visible during specific market stress periods. The All Weather portfolio recorded smaller declines during the 2013 taper tantrum and the Covid-19 market crash.

During the Covid-19 crash, the Nifty 500 TRI fell 31.7%, while the 60:40 portfolio declined 17.6%. The All Weather portfolio fell 6.4%.

The more recent comparison also highlights the strategy’s diversification benefit. Between January and September 2026, the Nifty 500 TRI declined 6%, and the 60:40 portfolio fell 2.8%, while the All Weather portfolio gained 1.2%. Zerodha’s analysis attributes much of the latter’s resilience to gold.

However, these results should not be interpreted as evidence that the All Weather portfolio will always outperform in a downturn. Its performance depends on how stocks, bonds and gold respond to the economic conditions driving a sell-off.

What is Ray Dalio’s All Weather portfolio?

Ray Dalio, founder of Bridgewater Associates, developed the All Weather approach around the idea that a portfolio should not depend on correctly predicting the next economic environment. Instead, it should hold assets that respond differently to changes in economic growth and inflation.

The original simplified allocation popularised by Dalio comprises equities, long-term and medium-term government bonds, gold and commodities. For the Indian version, Zerodha Varsity moved the commodities allocation into gold, given the limited availability of broad commodity funds for retail investors.

The Indian portfolio used in the backtest had the following allocation.

By comparison, Zerodha’s 60:40 portfolio held 60% in the Nifty 500 TRI, 20% in 10-year government securities and 20% in five-year government securities. Both portfolios were rebalanced every December in the backtest.

The lower equity allocation helps explain why the All Weather portfolio captured less of the stock market’s gains over the period. Its larger allocations to bonds and gold, however, reduced its exposure to equity market swings.

Should Indian investors follow the All Weather strategy?

The backtest does not establish that the All Weather portfolio is universally better than a 60:40 portfolio. Instead, it illustrates the trade-off between returns and risk.

Investors with long time horizons and a high tolerance for volatility may prefer greater equity exposure to pursue higher returns. Those who are more concerned about large losses may value a diversified allocation, particularly if steep drawdowns could cause them to sell investments at the wrong time.

Investors who prefer not to manage separate equity, debt and gold holdings can also examine multi-asset allocation mutual funds. These funds invest across asset classes, but their allocations, rebalancing methods, costs and risk profiles vary. They should not automatically be treated as equivalent to the All Weather strategy.

Ultimately, the All Weather portfolio did not deliver the highest returns in Zerodha Varsity’s 15-year Indian comparison. Its case rests on something different: it delivered returns close to the 60:40 portfolio while experiencing substantially lower volatility and smaller drawdowns. Whether that trade-off is worthwhile depends on each investor’s goals, time horizon and ability to tolerate losses.