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 2026-07-03 (40.3 years): 10.2% CAGR, 1.19 Sharpe, -19.4% max drawdown, 9.4% volatility.
- Type
- Tactical (TAA)
- Author
- Wouter J. Keller
- Rebalancing
- Monthly
- Risk
- Moderate
- Period
- 1986-02-28 to 2026-07-03
- CAGR
- 10.2%
- Sharpe
- 1.19
- 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.
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 2026-07-03, LAA (Lethargic Asset Allocation) returned 10.2% CAGR with a -19.4% maximum drawdown and a Sharpe ratio of 1.19. 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 2026-07-03)
| Metric | LAA (Lethargic Asset Allocation) |
|---|---|
| Compound Annual Growth Rate (CAGR) | 10.2% |
| Maximum Drawdown | -19.4% |
| Sharpe Ratio | 1.19 |
| Sortino Ratio | 1.84 |
| Annualized Volatility | 9.4% |
| Calmar Ratio | 0.53 |
| Total Return | 4980.3% |
| Backtest Period | 40.3 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
Further reading
New to this approach? Read what tactical asset allocation is and how it works.
Track LAA (Lethargic Asset Allocation) in Your Portfolio
Sign up for BestFolio to get monthly rebalancing signals, blend strategies into custom portfolios, and receive alerts when allocations change.