verifiedCurated Strategy
· 56 yr backtestTactical

Quint Switching Filtered

Real CAGR12.2%
Max Drawdown-26.6%
Sharpe Ratio0.68

The Quint Switching Filtered portfolio was created by Lewis A. Glenn and introduced in his 2018 SSRN paper Simple and Effective Market Timing with Tactical Asset Allocation Part 2 -- Choices. The strategy selects the single best-performing asset from a universe of five risk assets -- US large-cap equities, US tech-heavy equities, international developed equities, emerging market equities, and long-term US Treasury bonds -- but only when all five simultaneously show positive three-month momentum. If even one does not, the entire portfolio moves to intermediate-term bonds.

Investment Philosophy

The "quint" in the name refers to the five competing risk assets. The "filtered" part refers to the strict unanimity requirement: the strategy does not simply pick the top performer -- it first checks whether all five assets are trending positively over the past three months. If any single risk asset has turned negative, the strategy treats this as a warning sign of broader market weakness and moves 100% to its defensive holding. The logic is that a genuinely healthy risk environment should show positive momentum broadly, not just in one corner of the market. Because of this strict filter, the portfolio historically spends the majority of time in the defensive bond position.

Who It's For

This portfolio suits investors who prioritize capital preservation above all else and are comfortable with a strategy that holds equities infrequently, concentrates its full allocation in a single risk asset when it does, and accepts long stretches of underperformance relative to equity benchmarks. A long time horizon and high tolerance for tracking error are essential. For a related, simpler switching approach from the same author, see Paired Switching.

Pros

  • Very strict defensive filter has historically kept the portfolio out of equities during broad market downturns
  • Unanimity requirement across five assets makes it unlikely to be caught holding equities during widespread selling
  • Fully rules-based -- no judgment required

Cons

  • Historically spends approximately 75% of time in the defensive bond position -- very low average equity exposure
  • 100% concentration in a single risk asset when invested creates high idiosyncratic risk
  • Strict filter frequently produces false positives that exclude the portfolio from equities during normal volatility
  • Likely to significantly lag a simple 60/40 portfolio or equity index during sustained bull markets

Technical Notes

Signals are evaluated monthly on the last trading day using three-month total returns. All five risk assets must show positive three-month returns for any equity position to be held. The defensive asset is intermediate-term US Treasuries.

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Average Allocation

Based on historical average weights across all rebalance periods.

Monthly
Intermediate-Term Treasury Bond(IEF)75.6%
US Large-Cap Tech Growth(QQQ)9.6%
Emerging Markets Equity(EEM)7.9%
International Developed Equity(EFA)3.5%
Long-Term Treasury Bond(TLT)2.6%
US Large-Cap Blend(SPY)0.9%

Performance Snapshot

trending_upReal CAGR
12.24%
balanceSharpe Ratio
0.680
trending_downMax Drawdown
-26.65%
show_chartSortino Ratio
0.120
arrow_upwardBest Year
+50.6%
arrow_downwardWorst Year
-15.2%
update10-Year CAGR
3.12%
warningUlcer Index
5.89
analyticsUlcer Perf. Index
1.310
account_balanceGFC CAGR
+10.8%
computerDot-com CAGR
+11.9%
syncTrade Frequency
Monthly
shieldRisk Level
3/5 — Moderate
calendar_monthMin. Timeline
5 years
historyBacktest Period
56 years

Rolling Returns

PeriodLowAverageHigh
1 Year-17.2%+13.1%+75.6%
3 Year-9.4%+12.5%+32.9%
5 Year-3.0%+12.6%+27.8%
10 Year+2.3%+13.1%+21.2%
Compare to:

Growth of $10,000

Quint Switching Filtered
Sharpe Ratio0.68
Best Year+50.6%
Worst Year-15.2%
Final Value$6,690,100

Historical Drawdown

Percentage decline from the portfolio's peak value at each point in time.

Rolling Returns

Annualised return for each rolling period ending on that date.

Annualised return for each 1Y period ending on that date.

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