Growth-Inflation Sector Timing
TacticalProaggressiveBased on research by Inspired by David Varadi (CSS Analytics) · Inspired by Varadi, D. (CSS Analytics). Growth-Inflation Sector Timing
This is BestFolio's independent implementation. Not affiliated with or endorsed by the original author.
Launched 2024About this Strategy
Macro regime rotation based on growth (SPY 200d SMA) and inflation (sector relative performance). Classifies the economy into 4 quadrants and allocates to the sector ETF that historically performs best in each regime.
The complete strategy logic, asset universe, and rebalancing rules are available to Pro subscribers. This includes the full methodology description, author notes, and implementation details.
Pro subscribers also get access to current signals, full backtest history, and the ability to blend this strategy into custom portfolios.
Strategy Rules
Pro subscribers only
- 1Growth signal: SPY > 200-day SMA = high growth, below = low growth
- 2Inflation signal: (XLE+XLB+XLI+XLF) / (XLU+XLV+XLP+XLY) ratio > its 200-day SMA = high inflation
- 3High Growth + High Inflation → 100% XLE (Reflation)
- 4High Growth + Low Inflation → 100% XLK (Goldilocks)
- 5Low Growth + High Inflation → 100% XLV (Stagflation)
- 6Low Growth + Low Inflation → 100% XLP (Deflation)
- 7Diversified variant: top-2 sectors per quadrant (50/50 blends)
Key Differentiators
Research Source
Based on research by Inspired by David Varadi (CSS Analytics)
Inspired by Varadi, D. (CSS Analytics). Growth-Inflation Sector Timing
Strategy Info
- Type
- Tactical (TAA)
- Frequency
- monthly
- Next Rebalance
- Jun 109:30 ET (10d)
- Variants
- 2
- Risk Category
- aggressive
- Tags
- sector-rotation, macro, inflation
- Type
- Tactical Asset Allocation (TAA)
- Trading Frequency
- Monthly (last trading day)
- Growth Signal
- SPY vs 200-day SMA
- Inflation Signal
- Inflation-positive / inflation-negative sector ratio vs 200-day SMA
- Quadrants
- 4 (High Growth/High Inflation, High Growth/Low Inflation, Low Growth/High Inflation, Low Growth/Low Inflation)
- Data Source
- Institutional-grade market data (13 months minimum history)
Asset Classes
Growth-Inflation Sector Timing at a glance
Growth-Inflation Sector Timing is a tactical asset allocation (TAA) strategy by Inspired by David Varadi (CSS Analytics) across Energy, Technology, Materials, Healthcare, rebalanced monthly. Backtested 1987-10-30 to 2026-05-20 (38.6 years): 17.6% CAGR, 0.86 Sharpe, -38.9% max drawdown, 21.3% volatility.
- Type
- Tactical (TAA)
- Author
- Inspired by David Varadi (CSS Analytics)
- Rebalancing
- Monthly
- Risk
- Aggressive
- Period
- 1987-10-30 to 2026-05-20
- CAGR
- 17.6%
- Sharpe
- 0.86
- Max Drawdown
- -38.9%
- Volatility
- 21.3%
Growth-Inflation Sector Timing — Tactical Asset Allocation Strategy
Growth-Inflation Sector Timing is a macro regime rotation strategy inspired by David Varadi of CSS Analytics. It classifies the economic environment into four quadrants based on growth and inflation signals, then allocates to the sector ETF that historically performs best in that regime.
Growth signal: SPY vs 200-day SMA. Inflation signal: ratio of inflation-positive sectors (XLE, XLB, XLI, XLF) to inflation-negative sectors (XLU, XLV, XLP, XLY) vs its 200-day SMA.
Backtest Performance (1987-10-30 to 2026-05-20)
| Metric | Growth-Inflation Sector Timing |
|---|---|
| Compound Annual Growth Rate (CAGR) | 17.6% |
| Maximum Drawdown | -38.9% |
| Sharpe Ratio | 0.86 |
| Sortino Ratio | 1.23 |
| Annualized Volatility | 21.3% |
| Calmar Ratio | 0.45 |
| Total Return | 51147.8% |
| Backtest Period | 38.6 years |
Strategy Details
- Type
- Tactical (TAA)
- Rebalancing
- monthly
- Risk Level
- aggressive
- Variants
- 2
- Author
- Inspired by David Varadi (CSS Analytics)
- Source
- Inspired by Varadi, D. (CSS Analytics). Growth-Inflation Sector Timing
Asset Classes
- Energy
- Technology
- Materials
- Healthcare
- Consumer Staples
Categories
Track Growth-Inflation Sector Timing in Your Portfolio
Sign up for BestFolio to get monthly rebalancing signals, blend strategies into custom portfolios, and receive alerts when allocations change.