Carlson's Adaptive 60/40
Hold 60% SPY at all times. Compute average momentum (mean of 1m, 3m, 6m, 12m returns) for TLT, GLDM and PDBC. Backtest max drawdown: -36.7%.
Strategy & methodology
Hold 60% SPY at all times; Compute average momentum (mean of 1m, 3m, 6m, 12m returns) for TLT, GLDM and PDBC; Allocate the remaining 40% entirely to the single highest-momentum hedge; Rebalance monthly on the last trading day.
- Strategy type:
- Tactical asset allocation
- Rebalance frequency:
- Monthly
- Original publication:
- Not recorded. All results are backtest simulations.
- Data through:
- Backtest data through 2026-10-01.
Simulated history
Stand-in funds and until when (4)
- GLDM: GLD before Jun 26, 2018
- PDBC: DBC before Nov 7, 2014
- TLT: VUSTX before Jul 26, 2002
- SPY: VFINX before Jan 29, 1993
Before these dates the backtest uses a stand-in, not the fund itself, so the results over those stretches show how the rules would have behaved, not what the fund returned.
Research data and disclosures
Hold 60% SPY at all times. Compute average momentum (mean of 1m, 3m, 6m, 12m returns) for TLT, GLDM and PDBC. Backtest max drawdown: -36.7%. This is a tactical asset allocation strategy. BestFolio supplies the public rule or approach and backtest context; current signals, allocations, and paid interactive data remain restricted to Pro access. Users review the published signal and place any resulting trades in their own brokerage. Displayed returns remain hypothetical and do not represent a customer's brokerage record. The facts above show how current the data is.
- BestFolio supplies
- The monthly signal email and this strategy page; current signals and email alerts require Pro access.
- Customer action
- Review the published signal and place any required trades in your own brokerage. BestFolio does not execute orders.
- Costs and exclusions
- Backtests are net of a modeled one-way transaction cost (10 bps, scaled up to 3x under stress); taxes, fund-expense drift, or market impact are not modeled. No tax, no slippage beyond the stated cost. Methodology limitations
Published result: Engine drift-until-flip-v1, data version 5d8027a5, published 2026-10-01
Is Carlson's Adaptive 60/40 still working in 2026?
Carlson's Adaptive 60/40 returned 24.24% over the trailing 12 months and 115.32% over 36 months through 2026-10-01, compared with a full-backtest annualized return of 11.71%. Its full-backtest maximum drawdown was -36.69%. The full sample contains 10339 daily NAV observations from 1986-02-28. These are model results, not investor account returns or a promise. As of 2026-10-01 it is -0.86% below its high-water mark of 2026-09-24, 7 days ago, and its longest run below a previous high was 3.7 years. Recent returns do not establish that the strategy will keep working.
| Period | Return | CAGR | Max drawdown | Observations | Dates |
|---|---|---|---|---|---|
| Trailing 12 months | 24.24% | Not annualized | -12.04% | 252 | 2025-10-01 to 2026-10-01 |
| Trailing 36 months | 115.32% | Not annualized | -12.04% | 754 | 2023-09-29 to 2026-10-01 |
| Full backtest | 8846.24% | 11.71% | -36.69% | 10339 | 1986-02-28 to 2026-10-01 |
Last verified
Common questions about these results
Are these live investor returns?
No. These are the latest model NAV results from the published backtest. A recent date alone does not make a result an independently observed live record. Investor costs, taxes and execution can differ.
Why can a strategy lag for a year?
A tactical model can hold defensive assets during a rally or change positions during reversals. A short window can differ substantially from its full history. Compare cumulative returns over matching dates and inspect drawdowns as well.
How long has it spent below a previous high?
Its last high-water mark was 2026-09-24, 7 days before 2026-10-01, and it is -0.86% below that level now. The longest run below a previous high in the full backtest was 3.7 years. Recovering from a drawdown can take years, and a strong trailing return does not mean a past high has been regained.
Where can I check the signals behind these results?
The Signals tab on this page lists each dated model decision for the selected variant; for Pro strategies they are visible to Pro members. The methodology page explains the backtest assumptions.
Carlson's Adaptive 60/40 at a glance
Carlson's Adaptive 60/40 is a tactical asset allocation (TAA) strategy by Thomas Carlson across US Equity, Long-Term Treasuries, Gold, Commodities, rebalanced monthly. Backtested 1986-02-28 to 2026-10-01 (40.6 years): 11.7% CAGR, 1.06 Sharpe, -36.7% max drawdown, 12.5% volatility.
- Type
- Tactical (TAA)
- Author
- Thomas Carlson
- Rebalancing
- Monthly
- Risk
- Moderate
- Period
- 1986-02-28 to 2026-10-01
- CAGR
- 11.7%
- Sharpe
- 1.06
- Max Drawdown
- -36.7%
- Volatility
- 12.5%
Carlson's Adaptive 60/40 — Tactical Asset Allocation Strategy
Thomas Carlson's Adaptive 60/40 modernizes the classic balanced portfolio by rethinking the defensive sleeve. The 60% equity allocation (SPY) is held constant; the 40% "ballast" is no longer a static bond position but rotates each month into whichever liquid macro hedge is showing the most relative strength.
The premise is that the traditional bond ballast can fail exactly when it is needed: 2022 was a vivid example, when rising rates turned duration into a liability rather than a hedge. Instead of anchoring to bonds, the strategy rotates the 40% sleeve into the single strongest of long Treasuries (TLT), gold (GLDM) or broad commodities (PDBC), ranked by the equal-weighted average of 1, 3, 6 and 12-month returns. No leverage, no forecasts, one trade a month.
Carlson's Adaptive 60/40: frequently asked questions
- What is Carlson's Adaptive 60/40?
- Holds 60% SPY and rotates the 40% defensive sleeve monthly into the strongest of TLT, GLDM or PDBC by 1/3/6/12-month momentum. A regime-adaptive replacement for the fixed bond ballast in a classic 60/40.
- Who created the Carlson's Adaptive 60/40 strategy?
- Carlson's Adaptive 60/40 was developed by Thomas Carlson. It is based on Carlson, T. (2026). Adaptive 60/40: Rethinking the Defensive Sleeve (LinkedIn).
- What is the historical return and maximum drawdown of Carlson's Adaptive 60/40?
- Backtested from 1986-02-28 to 2026-10-01, Carlson's Adaptive 60/40 returned 11.7% CAGR with a -36.7% maximum drawdown and a Sharpe ratio of 1.06. Past performance does not guarantee future results.
- How often is Carlson's Adaptive 60/40 rebalanced?
- Carlson's Adaptive 60/40 is rebalanced monthly. BestFolio publishes the updated allocation signal each period.
- Is Carlson's Adaptive 60/40 a tactical asset allocation strategy?
- Yes. Carlson's Adaptive 60/40 is a tactical asset allocation (TAA) strategy: it adjusts its holdings based on market signals each period rather than holding a fixed allocation.
Backtest Performance (1986-02-28 to 2026-10-01)
| Metric | Carlson's Adaptive 60/40 |
|---|---|
| CAGR | 11.7% |
| Max Drawdown | -36.7% |
| Sharpe | 1.06 |
| Sortino | 1.73 |
| Volatility | 12.5% |
| Calmar | 0.32 |
| Total Return | 8846.2% |
| Backtest Period | 40.6 years |
Every rebalance fills at the signal-day close, net of modeled transaction costs. Followers trade at the next open; the delayed-close line in the Rebalance Frequency Sensitivity card shows the effect of trading one session later. Execution assumption
Strategy Details
- Type
- Tactical (TAA)
- Rebalancing
- monthly
- Risk Level
- moderate
- Variants
- 1
- Author
- Thomas Carlson
- Source
- Carlson, T. (2026). Adaptive 60/40: Rethinking the Defensive Sleeve (LinkedIn)
Asset Classes
- US Equity
- Long-Term Treasuries
- Gold
- Commodities
Further reading
New to this approach? Read what tactical asset allocation is and how it works.
Holding Carlson's Adaptive 60/40 alongside another strategy? Use the free portfolio overlap calculator to see how much of the two portfolios actually differs.
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