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.

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.

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.

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.