The Rational-Invest Permanent Portfolio Income Strategy
The strategy is a modified version of the classic Permanent Portfolio strategy developed by Harry Browne in 2001.
The strategy invests only in the most liquid assets worldwide which are Futures and Options of the S&P500, Gold and long duration Treasuries. These trade nearly 24 hours a day with high liquidity and small spreads which considerably lowers the risk during market corrections.
The strategy is a low volatility (= low risk) strategy for conservative investors and produces a steady dividend like premium income due to the continuous option writing process. As the strategy always invests about 2/3rd in the safe haven assets Gold and Treasuries and only about 1/3rd in equity, the March 2020 Corona crash did not result in a mayor strategy drawdown. The volatility of the strategy is mostly below 7% compared to normal equity which has a normal volatilities in the range of 15-25%
The following paper describes our main investment strategy: A Low Volatility Option based Permanent Portfolio Strategy
The Cash Strategy
The cash strategy allows investors to keep large Euro or Swiss Franc cash positions without paying negative interest rates. The money is invested in very liquid AAA rated US short term (3-7) years Treasuries and TIPS which are inflation protected US Treasuries. These US $ dominated Treasuries will return about 2% per year.
The US$ currency risk is hedged by writing EUR or CHF options with long expiry against this US$ position.
This strategy allows us to park your money free from negative interest rates and even returning about 2% per year. The strategy has an exceptionally low risk with a volatility below 2%. The chosen Treasuries are known as “save haven” assets and have proved to perform well during the equity market crashes of the last 20 years. The addition of inflation protected Treasurys adds an additional protection against inflation and a devaluation of your cash reserves.
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