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 2026-07-03 (40.3 years): 11.6% CAGR, 1.06 Sharpe, -35.6% max drawdown, 12.6% volatility.
- Type
- Tactical (TAA)
- Author
- Thomas Carlson
- Rebalancing
- Monthly
- Risk
- Moderate
- Period
- 1986-02-28 to 2026-07-03
- CAGR
- 11.6%
- Sharpe
- 1.06
- Max Drawdown
- -35.6%
- Volatility
- 12.6%
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 2026-07-03, Carlson's Adaptive 60/40 returned 11.6% CAGR with a -35.6% 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 2026-07-03)
| Metric | Carlson's Adaptive 60/40 |
|---|---|
| Compound Annual Growth Rate (CAGR) | 11.6% |
| Maximum Drawdown | -35.6% |
| Sharpe Ratio | 1.06 |
| Sortino Ratio | 1.47 |
| Annualized Volatility | 12.6% |
| Calmar Ratio | 0.33 |
| Total Return | 8345.1% |
| Backtest Period | 40.3 years |
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.
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