LAA (Lethargic Asset Allocation)
TacticalPromoderateBased on research by Wouter J. Keller · Keller, W.J. (2019). Lethargic Asset Allocation (LAA)
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Launched Dec 4, 2019About this Strategy
Low-maintenance allocation with a permanent 75% core (value stocks, gold, bonds) plus a 25% growth sleeve. The growth sleeve rotates to cash only when both unemployment rises and equities trend below their SMA.
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
- 1Hold static positions: IWD 25%, GLD 25%, IEF 25% (these never change)
- 2Check condition A: Is US unemployment rate (FRED UNRATE) above its 12-month moving average?
- 3Check condition B: Is SPY price below its 200-day SMA?
- 4If BOTH conditions are true → replace QQQ with SHY (defensive: 25% SHY)
- 5If EITHER condition is false → hold QQQ (risk-on: 25% QQQ)
Key Differentiators
Research Source
Based on research by Wouter J. Keller
Keller, W.J. (2019). Lethargic Asset Allocation (LAA)
Strategy Info
- Type
- Tactical (TAA)
- Frequency
- monthly
- Next Rebalance
- Jun 109:30 ET (10d)
- Variants
- 1
- Risk Category
- moderate
- Tags
- momentum, economic
- Type
- Tactical Asset Allocation (TAA)
- Trading Frequency
- Monthly (last trading day)
- Rebalancing
- Single position toggle (75% of portfolio is static)
- Universe Size
- 5 assets (QQQ, IWD, GLD, IEF + SHY as defensive substitute)
- Static Positions
- IWD 25%, GLD 25%, IEF 25% (never change)
- Toggle Position
- QQQ 25% (risk-on) or SHY 25% (risk-off)
- Defensive Trigger
- BOTH: unemployment > 12-month MA AND SPY < 200-day SMA
- External Data
- FRED UNRATE (US unemployment rate)
- Data Source
- Institutional-grade market data + FRED API (13 months minimum history)
Asset Classes
LAA (Lethargic Asset Allocation) at a glance
LAA (Lethargic Asset Allocation) is a tactical asset allocation (TAA) strategy by Wouter J. Keller across US Equity (Nasdaq 100), US Equity (Value), Gold, Intermediate Treasuries, rebalanced monthly. Backtested 1986-02-28 to 2026-05-20 (40.2 years): 10.4% CAGR, 1.10 Sharpe, -19.4% max drawdown, 9.4% volatility.
- Type
- Tactical (TAA)
- Author
- Wouter J. Keller
- Rebalancing
- Monthly
- Risk
- Moderate
- Period
- 1986-02-28 to 2026-05-20
- CAGR
- 10.4%
- Sharpe
- 1.10
- Max Drawdown
- -19.4%
- Volatility
- 9.4%
LAA (Lethargic Asset Allocation) — Tactical Asset Allocation Strategy
Lethargic Asset Allocation (LAA) was published by Wouter Keller in 2019. It is a near-static portfolio with a single risk toggle, designed to minimize trading while still providing drawdown protection.
The base portfolio holds four assets at 25% each: QQQ (Nasdaq 100), IWD (Russell 1000 Value), GLD (gold), and IEF (intermediate treasuries). Three of these positions — IWD, GLD, and IEF — never change. Only the QQQ position is subject to a risk toggle.
Backtest Performance (1986-02-28 to 2026-05-20)
| Metric | LAA (Lethargic Asset Allocation) |
|---|---|
| Compound Annual Growth Rate (CAGR) | 10.4% |
| Maximum Drawdown | -19.4% |
| Sharpe Ratio | 1.10 |
| Sortino Ratio | 1.47 |
| Annualized Volatility | 9.4% |
| Calmar Ratio | 0.54 |
| Total Return | 5327.2% |
| Backtest Period | 40.2 years |
Strategy Details
- Type
- Tactical (TAA)
- Rebalancing
- monthly
- Risk Level
- moderate
- Variants
- 1
- Author
- Wouter J. Keller
- Source
- Keller, W.J. (2019). Lethargic Asset Allocation (LAA)
Asset Classes
- US Equity (Nasdaq 100)
- US Equity (Value)
- Gold
- Intermediate Treasuries
- Short-Term Treasuries
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