Faber Tactical Yield
Meb Faber's bond timing rule. Backtest max drawdown: -17.1%.
Strategy & methodology
At each month-end, read the 10-year Treasury yield, the Moody's Baa corporate yield and the 3-month T-bill yield (as published the business day before); Term premium = 10-year minus T-bill; credit premium = Baa minus T-bill; Compare each…
- Strategy type:
- Tactical asset allocation
- Rebalance frequency:
- Monthly
- Original publication:
- 2024-04; results after that are out-of-sample for the original research. All results are backtest simulations.
- Data through:
- Backtest data through 2026-10-14.
Simulated history
Stand-in funds and until when (3)
- LQD: PIGIX before Jul 26, 2002
- IEF: VFITX before Jul 26, 2002
- LQD: VWESX before Jul 26, 2002
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
Meb Faber's bond timing rule. Backtest max drawdown: -17.1%. 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 3d05f1f5, published 2026-10-10
Is Faber Tactical Yield still working in 2026?
Faber Tactical Yield returned 3.66% over the trailing 12 months and 13.90% over 36 months through 2026-10-14, compared with a full-backtest annualized return of 7.20%. Its full-backtest maximum drawdown was -17.05%. The full sample contains 15917 daily NAV observations from 1964-02-28. These are model results, not investor account returns or a promise. It closed at a new high on 2026-10-14, though its longest run below a previous high was 3.6 years. Recent returns do not establish that the strategy will keep working.
| Period | Return | CAGR | Max drawdown | Observations | Dates |
|---|---|---|---|---|---|
| Trailing 12 months | 3.66% | Not annualized | -0.01% | 252 | 2025-10-14 to 2026-10-14 |
| Trailing 36 months | 13.90% | Not annualized | -0.01% | 753 | 2023-10-13 to 2026-10-14 |
| Full backtest | 7690.45% | 7.20% | -17.05% | 15917 | 1964-02-28 to 2026-10-14 |
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?
It ended the sample at a new high on 2026-10-14. The longest run below a previous high in the full backtest was 3.6 years, which is the wait a holder would have had to sit through.
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.
Faber Tactical Yield at a glance
Faber Tactical Yield is a tactical asset allocation (TAA) strategy by Meb Faber across Intermediate Treasuries, Corporate Bonds, Cash, rebalanced monthly. Backtested 1964-02-28 to 2026-10-14 (62.6 years): 7.2% CAGR, 1.26 Sharpe, -17.1% max drawdown, 5.1% volatility.
- Type
- Tactical (TAA)
- Author
- Meb Faber
- Rebalancing
- Monthly
- Risk
- Conservative
- Period
- 1964-02-28 to 2026-10-14
- CAGR
- 7.2%
- Sharpe
- 1.26
- Max Drawdown
- -17.1%
- Volatility
- 5.1%
Faber Tactical Yield — Tactical Asset Allocation Strategy
Faber Tactical Yield is Meb Faber's rule for owning bonds only when they pay enough over cash. Faber presented it in 2024, under the title "T-Bills and Chill... Most of the Time", and Cambria runs a version of it as the Tactical Yield ETF (TYLD). Each month-end it looks at two yield premiums over the 3-month Treasury bill: the 10-year Treasury yield (the term premium) and the yield of investment-grade corporate bonds (the credit premium, read on Moody's Baa yield). Each premium is compared with its own history up to that date. When the term premium is above its historical median, half the portfolio goes to 7-10 year Treasuries; when the credit premium is above its median, the other half goes to investment-grade corporate bonds. Whatever is not in bonds sits in Treasury bills. So it holds bonds when they are cheap relative to cash and waits in bills when they are not.
On BestFolio's engine, net of 10 bps a trade, it returned 7.2% a year from February 1964 to October 2026 with 5.7% volatility and a -17.1% worst fall (December 2021 to June 2022). A fixed half-and-half mix of the same two bond funds returned 6.2% with 7.2% volatility and a -23.5% worst fall, intermediate Treasuries alone 5.7% and -28.5%, and Treasury bills 4.5%. It held the Treasury half in 55% of months, the corporate half in 68%, and was fully in bills 32% of the time, changing its holdings about once a year. In 2022 it lost 10.4% against 16.5% for the fixed mix.
Faber Tactical Yield: frequently asked questions
- What is Faber Tactical Yield?
- Meb Faber's bond timing rule. Each month-end it compares two yield premiums with their own history: the 10-year Treasury yield over the 3-month T-bill, and the investment-grade corporate yield (Moody's Baa) over the same T-bill. When a premium is above its historical median, half the portfolio goes to the matching bond fund (7-10 year Treasuries or investment-grade corporates); otherwise that half stays in T-bills.
- Who created the Faber Tactical Yield strategy?
- Faber Tactical Yield was developed by Meb Faber. It is based on Meb Faber, T-Bills and Chill... Most of the Time (Cambria, 2024), the rule behind the Cambria Tactical Yield ETF.
- What is the historical return and maximum drawdown of Faber Tactical Yield?
- Backtested from 1964-02-28 to 2026-10-14, Faber Tactical Yield returned 7.2% CAGR with a -17.1% maximum drawdown and a Sharpe ratio of 1.26. Past performance does not guarantee future results.
- How often is Faber Tactical Yield rebalanced?
- Faber Tactical Yield is rebalanced monthly. BestFolio publishes the updated allocation signal each period.
- Is Faber Tactical Yield a tactical asset allocation strategy?
- Yes. Faber Tactical Yield 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 (1964-02-28 to 2026-10-14)
| Metric | Faber Tactical Yield |
|---|---|
| CAGR | 7.2% |
| Max Drawdown | -17.1% |
| Sharpe | 1.26 |
| Sortino | 2.47 |
| Volatility | 5.1% |
| Calmar | 0.42 |
| Total Return | 7689.6% |
| Backtest Period | 62.6 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
- conservative
- Variants
- 1
- Author
- Meb Faber
- Source
- Meb Faber, T-Bills and Chill... Most of the Time (Cambria, 2024), the rule behind the Cambria Tactical Yield ETF
Asset Classes
- Intermediate Treasuries
- Corporate Bonds
- Cash
Further reading
New to this approach? Read what tactical asset allocation is and how it works.
Holding Faber Tactical Yield alongside another strategy? Use the free portfolio overlap calculator to see how much of the two portfolios actually differs.
Track Faber Tactical Yield in Your Portfolio
Sign up for BestFolio to get monthly rebalancing signals, blend strategies into custom portfolios, and receive alerts when allocations change.