Growth-Trend Timing
Growth signal: HYG/IEF price ratio > its 12-month SMA? Trend signal: SPY price > 200-day SMA? Both bullish then 100% SPY. Backtest max drawdown: -33.1%.
Strategy & methodology
Growth signal: HYG/IEF price ratio > its 12-month SMA; Trend signal: SPY price > 200-day SMA; Both bullish → 100% SPY; One bullish, one bearish → 50% SPY + 50% TLT; Both bearish → 100% TLT.
- Strategy type:
- Tactical asset allocation
- Rebalance frequency:
- Monthly
- Original publication:
- 2016-01-18; results after that are out-of-sample for the original research. All results are backtest simulations.
- Data through:
- Backtest data through 2026-10-01.
Simulated history
Stand-in funds and until when (2)
- 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
Growth signal: HYG/IEF price ratio > its 12-month SMA? Trend signal: SPY price > 200-day SMA? Both bullish then 100% SPY. Backtest max drawdown: -33.1%. 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 ccef09c4, published 2026-10-01
Is Growth-Trend Timing still working in 2026?
Growth-Trend Timing returned 8.09% over the trailing 12 months and 57.50% over 36 months through 2026-10-01, compared with a full-backtest annualized return of 12.00%. Its full-backtest maximum drawdown was -33.09%. The full sample contains 10227 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 -1.72% below its high-water mark of 2026-08-13, 2 months ago, and its longest run below a previous high was 2.5 years. Recent returns do not establish that the strategy will keep working.
| Period | Return | CAGR | Max drawdown | Observations | Dates |
|---|---|---|---|---|---|
| Trailing 12 months | 8.09% | Not annualized | -7.68% | 252 | 2025-10-01 to 2026-10-01 |
| Trailing 36 months | 57.50% | Not annualized | -14.87% | 754 | 2023-09-29 to 2026-10-01 |
| Full backtest | 9845.43% | 12.00% | -33.09% | 10227 | 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 2026-08-13, 2 months before 2026-10-01, and it is -1.72% below that level now. The longest run below a previous high in the full backtest was 2.5 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.
Growth-Trend Timing at a glance
Growth-Trend Timing is a tactical asset allocation (TAA) strategy by Philosophical Economics across US Equity, Long-Term Treasuries, rebalanced monthly. Backtested 1986-02-28 to 2026-10-01 (40.6 years): 12.0% CAGR, 1.00 Sharpe, -33.1% max drawdown, 13.7% volatility.
- Type
- Tactical (TAA)
- Author
- Philosophical Economics
- Rebalancing
- Monthly
- Risk
- Moderate
- Period
- 1986-02-28 to 2026-10-01
- CAGR
- 12.0%
- Sharpe
- 1.00
- Max Drawdown
- -33.1%
- Volatility
- 13.7%
Growth-Trend Timing — Tactical Asset Allocation Strategy
Growth-Trend Timing is a dual-signal regime strategy from the Philosophical Economics blog. It combines a credit spread signal (HYG/IEF ratio vs 12-month SMA) with a price trend filter (SPY vs 200-day SMA) to determine equity vs bond exposure.
The two signals combine into three regimes: both bullish → 100% SPY; one bullish → 50/50 SPY/TLT; both bearish → 100% TLT. This graduated approach avoids all-or-nothing whipsaws by using a middle ground when the two indicators disagree.
Growth-Trend Timing: frequently asked questions
- What is Growth-Trend Timing?
- Dual-signal regime strategy using HYG/IEF ratio as a growth proxy and SPY 200-day SMA as a trend filter. Both bullish holds 100% equities; one bullish gives 50/50; neither holds 100% bonds. Monthly rebalancing.
- Who created the Growth-Trend Timing strategy?
- Growth-Trend Timing was developed by Philosophical Economics. It is based on Philosophical Economics blog. Growth-Trend Timing..
- What is the historical return and maximum drawdown of Growth-Trend Timing?
- Backtested from 1986-02-28 to 2026-10-01, Growth-Trend Timing returned 12.0% CAGR with a -33.1% maximum drawdown and a Sharpe ratio of 1.00. Past performance does not guarantee future results.
- How often is Growth-Trend Timing rebalanced?
- Growth-Trend Timing is rebalanced monthly. BestFolio publishes the updated allocation signal each period.
- Is Growth-Trend Timing a tactical asset allocation strategy?
- Yes. Growth-Trend 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 (1986-02-28 to 2026-10-01)
| Metric | Growth-Trend Timing |
|---|---|
| CAGR | 12.0% |
| Max Drawdown | -33.1% |
| Sharpe | 1.00 |
| Sortino | 1.62 |
| Volatility | 13.7% |
| Calmar | 0.36 |
| Total Return | 9845.4% |
| 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
- Philosophical Economics
- Source
- Philosophical Economics blog. Growth-Trend Timing.
Asset Classes
- US Equity
- Long-Term Treasuries
Categories
Further reading
New to this approach? Read what tactical asset allocation is and how it works.
Holding Growth-Trend Timing alongside another strategy? Use the free portfolio overlap calculator to see how much of the two portfolios actually differs.
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