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 2026-07-03 (38.7 years): 15.1% CAGR, 0.86 Sharpe, -38.9% max drawdown, 20.5% volatility.
- Type
- Tactical (TAA)
- Author
- Inspired by David Varadi (CSS Analytics)
- Rebalancing
- Monthly
- Risk
- Aggressive
- Period
- 1987-10-30 to 2026-07-03
- CAGR
- 15.1%
- Sharpe
- 0.86
- Max Drawdown
- -38.9%
- Volatility
- 20.5%
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.
Growth-Inflation Sector Timing: frequently asked questions
- What is Growth-Inflation Sector Timing?
- 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. Inflation signal derived from relative strength of inflation-positive sectors (XLE/XLB/XLI/XLF) vs inflation-negative sectors (XLU/XLV/XLP/XLY).
- Who created the Growth-Inflation Sector Timing strategy?
- Growth-Inflation Sector Timing was developed by Inspired by David Varadi (CSS Analytics). It is based on Inspired by Varadi, D. (CSS Analytics). Growth-Inflation Sector Timing.
- What is the historical return and maximum drawdown of Growth-Inflation Sector Timing?
- Backtested from 1987-10-30 to 2026-07-03, Growth-Inflation Sector Timing returned 15.1% CAGR with a -38.9% maximum drawdown and a Sharpe ratio of 0.86. Past performance does not guarantee future results.
- How often is Growth-Inflation Sector Timing rebalanced?
- Growth-Inflation Sector Timing is rebalanced monthly. BestFolio publishes the updated allocation signal each period.
- Is Growth-Inflation Sector Timing a tactical asset allocation strategy?
- Yes. Growth-Inflation Sector Timing 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 (1987-10-30 to 2026-07-03)
| Metric | Growth-Inflation Sector Timing |
|---|---|
| Compound Annual Growth Rate (CAGR) | 15.1% |
| Maximum Drawdown | -38.9% |
| Sharpe Ratio | 0.86 |
| Sortino Ratio | 1.44 |
| Annualized Volatility | 20.5% |
| Calmar Ratio | 0.39 |
| Total Return | 22820.3% |
| Backtest Period | 38.7 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
Further reading
New to this approach? Read what tactical asset allocation is and how it works.
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