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 2026-07-03 (40.3 years): 11.1% CAGR, 0.93 Sharpe, -33.1% max drawdown, 13.6% volatility.
- Type
- Tactical (TAA)
- Author
- Philosophical Economics
- Rebalancing
- Monthly
- Risk
- Moderate
- Period
- 1986-02-28 to 2026-07-03
- CAGR
- 11.1%
- Sharpe
- 0.93
- Max Drawdown
- -33.1%
- Volatility
- 13.6%
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 2026-07-03, Growth-Trend Timing returned 11.1% CAGR with a -33.1% maximum drawdown and a Sharpe ratio of 0.93. 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 2026-07-03)
| Metric | Growth-Trend Timing |
|---|---|
| Compound Annual Growth Rate (CAGR) | 11.1% |
| Maximum Drawdown | -33.1% |
| Sharpe Ratio | 0.93 |
| Sortino Ratio | 1.23 |
| Annualized Volatility | 13.6% |
| Calmar Ratio | 0.33 |
| Total Return | 6785.9% |
| Backtest Period | 40.3 years |
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.
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