LAA (Lethargic Asset Allocation)
Hold static positions: IWD 25%, GLD 25%, IEF 25% (these never change). Backtest max drawdown: -19.7%.
Strategy & methodology
Hold static positions: IWD 25%, GLD 25%, IEF 25% (these never change); Check condition A: Is US unemployment rate (FRED UNRATE) above its 12-month moving average; Check condition B: Is SPY price below its 200-day SMA; If BOTH conditions…
- Strategy type:
- Tactical asset allocation
- Rebalance frequency:
- Monthly
- Original publication:
- 2019-12-04; 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 (3)
- SHY: VFISX before Jul 26, 2002
- IEF: VFITX before Jul 26, 2002
- IWD: SPY x0.95 before May 26, 2000
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
Hold static positions: IWD 25%, GLD 25%, IEF 25% (these never change). Backtest max drawdown: -19.7%. 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 783bec70, published 2026-10-01
Is LAA (Lethargic Asset Allocation) still working in 2026?
LAA (Lethargic Asset Allocation) returned 8.78% over the trailing 12 months and 61.01% over 36 months through 2026-10-01, compared with a full-backtest annualized return of 10.07%. Its full-backtest maximum drawdown was -19.70%. The full sample contains 10339 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 -3.71% below its high-water mark of 2026-08-25, 37 days ago, and its longest run below a previous high was 3.2 years. Recent returns do not establish that the strategy will keep working.
| Period | Return | CAGR | Max drawdown | Observations | Dates |
|---|---|---|---|---|---|
| Trailing 12 months | 8.78% | Not annualized | -8.40% | 252 | 2025-10-01 to 2026-10-01 |
| Trailing 36 months | 61.01% | Not annualized | -8.40% | 754 | 2023-09-29 to 2026-10-01 |
| Full backtest | 4811.75% | 10.07% | -19.70% | 10339 | 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 2026-08-25, 37 days before 2026-10-01, and it is -3.71% below that level now. The longest run below a previous high in the full backtest was 3.2 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.
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 2026-10-01 (40.6 years): 10.1% CAGR, 1.17 Sharpe, -19.7% max drawdown, 9.3% volatility.
- Type
- Tactical (TAA)
- Author
- Wouter J. Keller
- Rebalancing
- Monthly
- Risk
- Moderate
- Period
- 1986-02-28 to 2026-10-01
- CAGR
- 10.1%
- Sharpe
- 1.17
- Max Drawdown
- -19.7%
- Volatility
- 9.3%
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.
LAA (Lethargic Asset Allocation): frequently asked questions
- What is Lethargic Asset Allocation?
- 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. Monthly rebalancing.
- Who created the LAA (Lethargic Asset Allocation) strategy?
- LAA (Lethargic Asset Allocation) was developed by Wouter J. Keller. It is based on Keller, W.J. (2019). Lethargic Asset Allocation (LAA).
- What is the historical return and maximum drawdown of LAA (Lethargic Asset Allocation)?
- Backtested from 1986-02-28 to 2026-10-01, LAA (Lethargic Asset Allocation) returned 10.1% CAGR with a -19.7% maximum drawdown and a Sharpe ratio of 1.17. Past performance does not guarantee future results.
- How often is LAA (Lethargic Asset Allocation) rebalanced?
- LAA (Lethargic Asset Allocation) is rebalanced monthly. BestFolio publishes the updated allocation signal each period.
- Is LAA (Lethargic Asset Allocation) a tactical asset allocation strategy?
- Yes. LAA (Lethargic Asset Allocation) 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 | LAA (Lethargic Asset Allocation) |
|---|---|
| CAGR | 10.1% |
| Max Drawdown | -19.7% |
| Sharpe | 1.17 |
| Sortino | 2.07 |
| Volatility | 9.3% |
| Calmar | 0.51 |
| Total Return | 4811.8% |
| 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
- 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
Further reading
New to this approach? Read what tactical asset allocation is and how it works.
Holding LAA (Lethargic Asset Allocation) alongside another strategy? Use the free portfolio overlap calculator to see how much of the two portfolios actually differs.
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