Yesterday we looked at the mechanics of a Trend and Volatility Overlay (Identifying the Next Major Change in Trend for US Stocks) to protect our assets. Today we are looking at the growth advantage of the overlay via a backtest.
Download the backtest xls here…US Trend and Volatility Overlay
Advantage
The following backtest covering the 22 year period from January 1992 through December 2014 illustrates the advantage of using price and volatility trends with US stock and bond allocations over an allocation to a traditional index fund such as the Vanguard 500 Index Investor fund.
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