CapitalTime

Articles on investing and capital management, with a quantitative focus.

#prp - Permanent Risk Parity (how I invest)

Full annual rebalancing

2025-12-16

I completed my annual portfolio rebalancing. This means that I restored the PRP target weights by shifting money around inside the portfolio.

In this post, I’ll explain what I did with each asset class within the PRP. Rebalancing is a mechanical, systematic process that obeys my investment policy. It does not involve judgement calls, predictions or forecasts. The policy requires that I restore the target weights for each asset class.

Stocks

The equity component was already very close to the 40% target weight, because it performed the same as the overall PRP. However, I sold a bit of Canadian equity (which outperformed) and bought US equity (which underperformed).

Gold

This was the focus of my rebalancing. Gold outperformed every other asset class in the PRP and became severely overweight, due to its extreme performance this year. I sold gold, reducing it back to the 20% target weight.

Bonds

Bonds were the worst performer, and became underweight. The proceeds from gold were invested into bonds (and GICs) to bring it up to the 40% target weight.

— Jem Berkes