Portfolio 4 of 6
Plus trend
The full lean, with a quarter of the money in a fund that holds US stocks and a trend-following strategy at once, and five percent each in gold and inflation-protected bonds. Trend can help during persistent market declines, but it can lose alongside stocks.
Probably A plausible way to spread risk, from a fund with a short record. The simulated history is stronger than anything we know about future returns.
What you buy
Twelve funds: all nine of the full lean's stock funds at 65% together, RSST at 25%, and 5% each in gold and inflation-protected US government bonds. US small value (AVUV) is held at 5%: once the fund's own filed returns showed how much of its profit test it carries, those five points earned a small measurable gain on the long history. Every line here is five percent or more. RSST holds US stocks and trend following at once, so it can add trend without giving up much of the stock holding. What its trend side pays is not bound to match a trend index, in risk or in return. Gold and the bonds are paid for out of the stocks, and each carries a different risk.
One variation came close. Replacing VTI, VXUS and SCHP with NTSX, a fund that holds $90 of US stocks and $60 of Treasury futures for every $100, keeps the stock exposure and adds about 18% of borrowed government bonds in place of 5% of inflation-protected ones. On the 1990 history that added about half a percent a year, and it kept most of that when the rewards to the leans and to trend were halved; on the century it added a tenth. Its worst fall was the same, and its 2022 would have been worse: NTSX fell 26% that year against 18% for the S&P 500. It is not the published version because borrowing to hold bonds pays only when bonds earn more than the borrowing cost, and in 2026 the extra yield on long bonds over cash is under one percent. If that gap widens past about 1.5% and stocks and bonds go back to moving apart, it becomes the better construction.
| Fund | What it holds | Share | Fee on $10,000 | Account |
|---|---|---|---|---|
| RSST Return Stacked U.S. Stocks & Managed Futures ETF | US stocks and a managed-futures strategy | 25% | $99 | Pre-tax retirement account, first |
| VTI Vanguard Total Stock Market ETF | The whole US stock market | 17% | $3 | Taxable account |
| AVLV Avantis U.S. Large Cap Value ETF | Large US companies that are cheap and profitable | 8% | $15 | Taxable or retirement |
| AVUV Avantis U.S. Small Cap Value ETF | Small US companies that are cheap and profitable | 5% | $25 | Retirement account, Roth first |
| AVDV Avantis International Small Cap Value ETF | Small foreign companies that are cheap and profitable | 8% | $36 | Retirement account, Roth first |
| DFIV Dimensional International Value ETF | Large foreign companies that are cheap and profitable | 7% | $27 | Taxable or retirement |
| VXUS Vanguard Total International Stock ETF | Every stock market outside the US | 5% | $5 | Taxable or retirement |
| SPMO Invesco S&P 500 Momentum ETF | The hundred large US companies whose shares have been rising | 5% | $13 | Either |
| IDMO Invesco S&P International Developed Momentum ETF | Foreign companies whose shares have been rising | 5% | $25 | Either |
| AVES Avantis Emerging Markets Value ETF | Cheap companies in emerging markets | 5% | $36 | Retirement account |
| SCHP Schwab U.S. TIPS ETF | Inflation-protected US government bonds | 5% | $3 | Pre-tax retirement account |
| GLDM SPDR Gold MiniShares Trust | Gold in a vault | 5% | $10 | Retirement account |
Holding more trend is another option. It would lean harder on that one strategy and that one fund. The weight shown here is a working choice, not an amount proven best for most people.
What trend following is
Trend following generally buys markets that have been rising and sells short markets that have been falling. Funds differ in the markets they trade, the signals they use and how quickly they change course. Moves that persist help it. Sharp reversals hurt it. A sudden stock crash does not guarantee a gain.
Gold does a different job. It pays no earnings and no interest, and its price can move when stocks and bonds do not. That can help a portfolio. Gold can also fall a long way, or spend years buying less than it used to. The gold page explains why the holding is small.
What $10,000 did
- $10,000 became
- $764,000
- 1990 to 2025, simulated
- Growth
- 13.1% a year
- Against 10.3% for a plain world stock index
- Worst fall
- −44.0% $5,600
- October 2007 to February 2009, back to even in 38 months
- Costs a year on $10,000
- $37
- 0.37% fee, most of it RSST's 0.99%
| Series | Start | Finish |
|---|---|---|
| Plain world stock index | $10,000 in 1990-10 | $314,164 in 2025-12 |
| Full lean | $10,000 in 1990-10 | $553,929 in 2025-12 |
| Plus trend | $10,000 in 1990-10 | $763,532 in 2025-12 |
The gap between this and full lean comes from four changes at once: a different stock mix, trend following, the bonds and gold, and the extra cost. No single holding can take the credit. Since 2009, $10,000 became $81,000 against $77,500 for the plain index in this model.
The worst fall
−44.0% $10,000 fell to $5,600 and took 38 months to get back.
| Series | Worst fall |
|---|---|
| Plus trend | −44.0% |
| Plain world stock index | −52.7% |
It was back above $10,000 in December 2010, 38 months after the October 2007 peak. The plain world stock index fell to $4,730 and took 63 months. In calendar 2008 the portfolio lost 30.7% against 39.6% for the index; in 2022 it lost 9.9% against 17.8%.
What it beat, and by how much
In the simulation above, Plus trend grew 13.1% a year, against 10.3% for the plain stock index and 12.1% for full lean. On the longer 1932–2025 history, built from US data, those figures were 13.3%, 11.3% and 13.5%. The funds themselves did not earn these histories.
Those comparisons are encouraging. The uncertain part is what the trend fund itself will pay after costs. What it added changed from one period and one model to the next. A test that keeps the past swings and cuts only the expected reward is the harder one.
Holding more trend, or more of the stock leans, is still an option. So is a balanced portfolio that borrows inside a fund to leave room for something else. None of them wins on growth, losses, costs and what you have to assume about the funds all at once. See how to compare combinations.
Who it is for
Someone with a long time to wait, who wants trend alongside stocks, can live with the fund's cost and its tax bill, and can sit through both deep falls and years behind a stock index. The fall shown above is an example of what can happen, not a limit on what you could lose.
How to hold it
What could go wrong
RSST has a short record, and how closely it follows a trend index is not settled. A fund can hold large futures positions and still spread your risk less than the model assumes. Fees, financing costs, markets that start moving together, and signals that keep reversing can each eat the benefit.
Two funds with similar names can run different strategies, and a manager or a method can change. Gold and bonds can lose alongside stocks too.
The long history
Over 1932 to 2025, with foreign market and stock-style exposures mapped to US data, a four-market trend rule sized from earlier observations with assumed costs, a plain government bond in place of SCHP, and gold earning the cash rate before its price series begins, $10,000 at the March 1937 peak fell to $5,160 by March 1938, a fall of 48.5%, and took 73 months to get back; all US stocks fell 50.3% and took 52 months, and the full lean fell 54.5%. Over that window the portfolio grew 13.3% a year against 11.3% for all US stocks and 13.5% for the full lean. Nobody earned these returns, and nobody sat through those falls knowing how they would end. The window excludes the 1929–1931 decline while the trend rule gathers its initial sizing history.